Six ways for Doctors to reduce taxes in 2016
As April 15 rolls around once again, most people are scrambling to finish their tax filing. Physicians are now exception to this, and as busy as they are, it is easy to miss some important deductions and considerations when filing.
1. Retirement Fundings.
According to Dr Jim Dahle, on his blog The White Coast Investor, “This is the biggest tax deduction I see doctors routinely missing out on. I’d guess less than 1/4 of doctors actually max out all the retirement account options available to them. Some because they simply don’t save enough money, but many simply don’t realize just how much money they can squirrel away into these things with huge tax benefits.”
2. Marketing, Advertisement and Social Media Expenses
Doctors have the ability to deduct marketing expenses associated with running and growing their clinics. This can also includes any costs associated with social media marketing and content marketing (ie. article writing, public speaking, etc). Many physicians do not realize they can claim more than just paid advertisements, so keeping records about all of your marketing expenses can pay off at tax time.
3. Computer Software and Hardware
As paper-based medical practice is being phased out, the shift to electronic records means that web hosting fees, software upgrades and computer expenses you’ve had to incur are all deductible. EHRs can ben an investment in technology that moves your practice ahead and also offers a deduction at the end of the year.
4. Healthcare Expenses
Health insurance is one of the most expensive costs that most households incur. But one of the few benefits (besides coverage) is that it can be paid for with pre-tax funds. For physicians, health insurance premiums are a deductible business expense, as are the contributions to a health savings account. that you can use for co-pays and deductibles. If you carefully consider which plan suits you and your family, you can potentially save both on premiums and on your taxes.
5. Continuing Education Expenses
Conferences and trainings can take time away from your work schedule, but they are beneficial for professional development. They are also beneficial for lowering your tax expense. Doctors who take time to do professional development courses or additional training can expense both the cost of the training, and any travel and accommodation to and from the events.
6. Donations and Charity
Doctors can benefit from any charitable giving they did during the year. Donations to a qualified charity are tax-deductible just like mortgage interest. There can also be deductions for donating large items such as an old car. Remember also that along with financial giving, you can also claim travel miles used in drive to and from charitable events where you are donating your time.
These are just the tip of the iceberg when it comes to ways to reduce tax costs. The more prepared you are, the better your reimbursement can be. Take some time to talk with a qualified accountant, and they will be able to advise you further.
Happy Tax Day!