Day in and day out, you dedicate your life's work to saving lives and improving the wellness of others. Far too often, however, your dedication often leaves little to no time for matters in your own life, such as tax planning. But the MB Group offers an entire team of specialized support and guidance for physicians.
From business accounting to personal financial planning, the MB Group can help. And to get you started, we've outlined some of our top tax planning tips for physicians that every doctor should use. Don't hesitate to reach out to the MB Group for the specialized attention you deserve.
Tax Planning Tip for Physicians #1: Lower Your Taxable Income
If you're looking to reduce your taxes and keep more of your earnings in your pocket, you will need to lower the amount of your income that is taxable. However, this doesn't mean you should earn less or work less. It means you need to strategically structure your contributions and income to lower your taxable income. And there are a number of ways the team at the MB Group can help you do just that.
Max Out Retirement Contributions to a Qualified Retirement Account
One way to reduce your taxable income is to increase your contributions to an employer-sponsored retirement plan. If you own your practice and are a business owner, you can start a retirement plan and contribute to it to significantly reduce your taxable income. On the other hand, you can contribute to an Individual Retirement Account up to a specific limit to reduce your taxable income. Work with your financial planner or accountant to learn if using the backdoor Roth IRA strategy would be beneficial for you.
Make Charitable Donations from Investment Accounts
Did you know you can deduct contributions you make to non-profit organizations from your taxable income? And you can amplify the effect of your charitable donations if you make them in the form of securities from your investment accounts. Unlike donating cash, investment donations stand to offer a double tax benefit. You will receive one deduction for making the gift and an additional benefit of not having to pay capital gains taxes on the sale of the securities.
Tax Planning Tip for Doctors #2: Reduce Your Tax Bill
While one major strategy is to reduce your taxable income, another strategy is to reduce the overall amount of taxes you owe. To do this, it's about maximizing your tax deductions and credits. For example, the home mortgage interest deduction is a very common deduction that the majority of homeowners choose to take. But did you know that you may also be able to deduct interest on up to $100,000 HELOC (home equity line of credit)?
As a high-earning physician, you may not be eligible to deduct your student loan interest, but a cash-out refinance from your mortgage may be deductible. Consider the implications of refinancing your home to pay off any debt from medical school. If you do, you may be able to claim the interest paid on the loan as a tax deduction. You should also work closely with an experienced physician tax planning specialist to capture any savings from tax credits such as:
- Continuing education fees
- Energy-efficient home improvements
Tax Planning Tip for Physicians # 3: Get Professional Assistance
Undoubtedly, the most important tax planning tip for doctors and physicians is to not do it alone! As a doctor, you specialize in saving lives — not complicated tax codes. And while navigating tax codes may be well within your abilities, it's not the best use of your time. To put it simply, optimizing your taxes is a full-time job, which shouldn't be put off until the last minute. Instead, it's best to partner with the experts at the MB Group for strategic year-round tax planning. Our team of financial planners, CPAs, and tax professionals will work closely with you on a continual basis to create a financial plan that centers around reducing your tax burden, diversifying your investments, and reducing your taxable income.
Contact the MB Group today to get the specialized attention and support you deserve.