Author: Ronica Brown | Estimated Reading Time: 2 minutes
Are you a medical doctor who gave away at least 35% of your income to the IRS last tax season?
It’s nerve-racking to see your tax bill deplete your hard-earned money!
So, you’re searching for a solution that can help you pay less taxes.
I’ve worked with several medical professionals over the past few years and helped each of them save at least $50,000 on their tax bill.
That’s $50,000 more in their pockets each year!
The strategies I use differ from what you’ll see in many other articles. Some of the most common tax strategies used include:
Reducing taxable income
Delaying collecting your money
Buying more equipment
Deferring taxes
Contributing to retirement plans
These strategies can form part of a tax savings plan. But, they won’t create a considerable dent in the taxes you pay. Certainly not $50,000 in savings!
You also won’t be able to spend your money freely if you use those strategies.
That’s why the tax savings strategies my team and I focus on relate more to:
Maximizing tax saving strategies that return cash to you rather than solely reduce your taxable income
Restructuring your business for tax benefits
Increased cash flow
Leveraging all tax benefits in recent tax legislation
This isn’t a DIY project; you won’t maximize these benefits if you try to access them on your own. You need a trained tax advisor who will align your tax savings plan with your short-term and long-term financial goals.
With that said, let me explain some of the most effective strategies that can be used to help you pay less taxes as a medical doctor.
These strategies help you maximize the money returned to you. I discuss them in greater detail in my free Tax Reduction Guide. You can access that guide for further details but here’s a synopsis of the key points.
Photo by JAFAR AHMED on Unsplash
Claim Tax Refunds from the Prior Year’s Tax Returns
You can claim tax refunds on the prior year’s tax returns by either:
Amending the tax return
Filing a method change
You can learn more about the sources of these refunds in The Tax Savings Blueprint.
We work with our clients to determine the method that allows them to claim the most lost deductions and ultimately increase the size of their refunds.
Create Deductions that Return Money to You
Most deductions cost money. In other words, you spend money on something and only get back a portion of the money you spent. But, there are some deductions that will actually return money to you. Some of them include:
Administrative home office deduction
Renting your home to your business for 14 days or less
Section 105 medical reimbursement plan
Restructure Your Business Entity and Assets
Your business must be structured the right way so that you can strategically move cash to pay yourself. Once you’ve maximized how much you pay yourself, you can begin saving more on taxes by either restructuring or adding other entities.
There are several options available, such as holding companies or management companies, to help you reduce your taxes. When done right, your taxable entity will create the first level of tax savings for your business.
Capitalize on New Tax Legislations
There are new tax legislations every few years, especially when there’s a change of administration. The team at RBA Tax Advisors keeps abreast of these changes and develops a strategy. This strategy helps us use the legal loopholes in the legislation to find tax savings for our clients.
For instance, the 2020 Cares Act that was enforced as a result of the coronavirus pandemic helped us get a client $88,262 back as a tax refund.
Invest in Tax Favorable Investments that Increase ROI
The government included some favorable tax investments in the tax law to help industries such as renewable energy and farming. Capitalizing on these investments can help you get both a good ROI and tax savings. You could use:
Pass through investments
Qualified tax credits
A trade-off of tax credits or incentives for tax discounts
One of our clients got a $23,483 federal tax credit in 2018 for investment in energy!
Conclusion: You Should Be Paying Less Taxes as a Medical Doctor
There are medical professionals who’ve come to me with over $100,000 in tax expenses. That’s way too much money! You may not be paying that much, but you may be spending at least 35% of your income on taxes. It’s time to change that!
The team at RBA Tax Advisors is ready to help you create a tax savings plan that increases your cash flow and helps you pay less taxes. Schedule a call with me to find out how we can help you.