Take Advantage of End-of-Year Tax Breaks for the Self-Employed Physician and Healthcare Professional
In America today, a large percentage of physicians and medical professionals fall into the category of being self employed. There are lots of advantages to being self employed. For starters, you get to be your own boss, make your own hours, and decide how hard you want to work. Plus, there are quite a few tax breaks available to you when you work for yourself. Andrew Schwartz, CPA, and founder of MDTAXES Network offers tax-saving opportunities for the self-employed.
Woburn, MA (PRWEB) December 30, 2004 -- There are lots of advantages to being
self-employed that include quite a few tax breaks. Even individuals who are just
moonlighting on the side are allowed to set up a retirement plan for their own
business and sock away a portion of the money earned into a pre-tax account.
According to Andrew Schwartz, CPA and founder of the MDTAXES Network of CPA’s
who specialize in providing tax and accounting services to healthcare
professionals, “That holds true even for physicians and healthcare professionals
who work for a hospital or clinic and are currently participating in that
company's retirement plan.” Schwartz lists tax-savings situations for the
self-employed as follows:
• In 2004 self-employed individuals can
contribute up to $18,000 into a SIMPLE or up to $41,000 into a SEP or a Solo
401(k), depending on their income and whether they participate in a 401(k) plan
or 403(b) plan through another employer. Self-employed individuals or Healthcare
professionals who turn 50 or older by December 31st can contribute an extra
$3,000 into a SIMPLE or a Solo 401(k) this year.
• There's a special
loophole that exempts children of self-employed individuals from paying social
security, Medicare, and federal unemployment taxes on wages paid by a parent.
For 2004, as long as your child is under the age of 18, you can pay him or her
up to $4,850, and your child won't owe any income taxes on that money (assuming
they have no other income.) Even so, you get to deduct the wages paid as a
business expense. As an additional incentive, your child can contribute the
lesser of what they earn from you, or $3,000, into a Roth IRA each year. Imagine
what the money contributed will be worth after 50 years or more of tax-free
growth!
• Self-employed individuals can now deduct 100% of their health
insurance premiums paid during the year. The only catch is that your net
self-employment income must exceed the premiums paid. If you (and your family)
are relatively healthy, consider switching to a high-deductible plan and opening
a Health Savings Account (HSA) - the new tax-advantaged way to fund your
family's healthcare costs. HSAs are discussed in detail in the August, 2004
Newsletter that can be found at www.mdtaxes.com.
• Another advantage of
being self-employed is that you get to deduct certain personal-type expenses
against your self-employment income. When compiling expenses, don't forget to
include business miles at $.375 per mile driven. You should also factor in the
business use portion of your computer purchases, internet access, and wireless
phone bills. And if you have a dedicated workspace in your home, claiming the
home office deduction will help cut your tax bill.
Other valuable tax
information specific to healthcare professionals can be found on
www.mdtaxes.com. The MDTAXES Network is an affiliation of CPAs throughout the
country that specializes in the tax planning and preparation for young
healthcare professionals. Contacting one of the MDTAXES CPAs will help ensure
that you minimize the taxes you pay on your self-employment earnings.
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Source : http://www.prweb.com/releases/2004/12/prweb192380.htm