tax time ! IC deductions for EP's

[ballinsncbirth]

hello all
with tax time around the corner I wanted to know what everyone is deducting
obviously we all take the retirement, dependent etc...

anyone using any "creative deductions"?

for example i travel 47 miles to my ED, usually before i start the shift i go to a restaurant and eat.
I was told by another EP that i could deduct these meals as "business meals" . Is this ok ?

anyone deducting other things that arent some of the normal IC deductions?

anyone using home office? (how much does that save you)

what "creative" yet legal deductions do you claim ?

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[Daiphon]

hello all
with tax time around the corner I wanted to know what everyone is deducting
obviously we all take the retirement, dependent etc...

anyone using any "creative deductions"?

for example i travel 47 miles to my ED, usually before i start the shift i go to a restaurant and eat.
I was told by another EP that i could deduct these meals as "business meals" . Is this ok ?

anyone deducting other things that arent some of the normal IC deductions?

anyone using home office? (how much does that save you)

what "creative" yet legal deductions do you claim ?

Not anything particularly creative, but be *very* careful with the "home office" deduction - it's on a list of things that frequently lead to audits... and especially if one is being creative with deductions, one does not want to be audited.

-d

 

[fahimaz7]

Why wouldn't we be able to claim home office if we are writing notes and studying from there? Residents only?

 

[Daiphon]

Not saying you can't; just need to be very careful with the space... the deduction is known to trigger audits. Audits are bad.

Has to be dedicated space that is not used for anything other than work purposes. A desk in a room used for other things doesn't count for much as you only get the square footage of the workspace (e.g. the desk).

 

[Birdstrike]

Get a good accountant, who's conservative with deductions but still maxes out what is legit. It's not worth the stress of an audit to save a few bucks, or the time to even prepare your own taxes, in my opinion.

 

[EM_Rebuilder]

I have a rather conservative accountant and we try to be creative and deduct all we can.

We do not take a penny for a home office, he suggested we don't, and many blogs, etc suggest the same. He says its been a well known 'audit trigger'. He also said if you want to take it, "Promise me there is a desk and some books and not one other thing in there as his company has had agents knock on doors requesting to see the office... and it better be just an office"

You cannot (should not) deduct mileage from your 'primary business location'...even if an IC; same goes to meals at that location. You will find some people that deduct both. If you work multiple sites, you can legitimately deduct those other sites mileage and meals and hotels, etc.

Mortgage interest is a big one. Also any professional travel/conferences/etc. Cell phone is fair game as is your home internet. Any books, stethoscope, etc.

The shadiest thing I probably deduct are some suits/shoes and dry cleaning. I do a fair amount in organized medicine; if it wasn't for that, I probably would not own a suit and not need to get them cleaned. The CPA said its iffy but agreed with my stance....

Taxes suck; especially now. Of course I 'owe', so I have that check to write as well as first quarter estimates so its a big double whammy.....

 

[The White Coat Investor]

47 miles and you're taking business meals? Did you actually read the rules on that? That's not creative, it's illegal.

Travel expenses are the ordinary and necessary expenses of traveling away from home for your business, profession or job. Generally, employees deduct these expenses by using Form 2106 (PDF)....
You are traveling away from home if your duties require you to be away from the general area of your tax home for a period substantially longer than an ordinary day's work, and you need to get sleep or rest to meet the demands of your work while away.


Generally, your tax home is the entire city or general area where your main place of business or work is located, regardless of where you maintain your family home. For example, you live with your family in Chicago but work in Milwaukee where you stay in a hotel and eat in restaurants. You return to Chicago every weekend. You may not deduct any of your travel, meals or lodging in Milwaukee because that is your tax home. Your travel on weekends to your family home in Chicago is not for your work, so these expenses are also not deductible. If you regularly work in more than one place, your tax home is the general area where your main place of business or work is located.

http://www.irs.gov/taxtopics/tc511.html

http://www.irs.gov/publications/p463/ch01.html#en_US_2014_publink100033754

What makes you think having a 47 mile commute entitles you to the deduction of a meal?

As a general rule "creative deductions" aren't worth nearly as much as the more well-known ones. My big work related deductions are retirement plans, HSA, health insurance premiums. My medium ones are ACEP dues and a few business miles a year. Once you get beyond that , we're talking about pennies- you know, deducting scrubs and that sort of stuff.

The home office rules are also quite clear. If you use an area exclusively and regularly for business, you can deduct. But I have a legit home business and don't claim a home office. Why not? Because there is no area of my home I use exclusively for it. Could I lie? Sure. But you can do that with anything on your taxes. I do not fear an audit, because I'm not doing anything wrong. Will I be audited eventually? Probably. And I'll pass.

 

[Mariah246]

What do you guys think about deductions for someone involved in telemedicine?

I currently have a home office set up (it truly is an office with a computer and nothing else) where I check my cases each morning

I then travel between two clinics after checking my cases

I'm an employee and not an IC which I understand limits my deductions thanks to the 2% floor, but I'm still planning on deducting my actual travel expenses (including the lease of my SUV, which is also 100% for work only)

Thoughts? Thanks

 

[EM_Rebuilder]

What do you guys think about deductions for someone involved in telemedicine?

I currently have a home office set up (it truly is an office with a computer and nothing else) where I check my cases each morning

I then travel between two clinics after checking my cases

I'm an employee and not an IC which I understand limits my deductions thanks to the 2% floor, but I'm still planning on deducting my actual travel expenses (including the lease of my SUV, which is also 100% for work only)

Thoughts? Thanks

Its legitimate, just make certain the room is dedicated SOLEY to that. No sewing machine, or a futon for the extra guest room, etc...

 

[DrFamily7]

Is it okay for ICs to deduct home computers and/or tablets?
Does the IRS allow ICs to deduct cell phones and internet when cell phone/internet is also used for personal use?

What do ICs deduct other than Retirement, Health Insurance, & Life Insurance?

 

[Arcan57]

Is it okay for ICs to deduct home computers and/or tablets?
Does the IRS allow ICs to deduct cell phones and internet when cell phone/internet is also used for personal use?

What do ICs deduct other than Retirement, Health Insurance, & Life Insurance?

Yes on cell phones and Internet. You have to estimate your business use. I'm not quite sure you'd document it but we aren't talking ridiculous sums so it doesn't have same scrutiny as home offices or transportation expenses.

 

[two guys]

I do take the home office deduction. It's a portion of a room. I deduct double the size of the desk and bookshelves surrounding the area. I do legitimately use the area for case review, credentialing, scheduling etc. If an agent knocked on my door and wanted to look at it, he'd find an obvious workspace with some EM books and office products only. I'm sure I've used the space once or twice when there's family with lots of kids in town so I can't say its ONLY used as my home office. But, it's probably used for "non-office" stuff less than anyone with a non-home office. He'd find another work desk in the house that's used for internet surfing, etc. I think the agent would be sorely disappointed if he was expecting to find something shady.

Compared to my "big deductions" it's small. But, last year it was a few thousand dollars. My accountant and I talked about it. It is an honest accounting of what I use the space for. I don't want to get audited because of the time involved, but if it happened I think they'd find pretty straightforward and defensible deductions. I don't get creative with meals or vacations or travel. I sincerely doubt they'd find a correction.

Now, if you're claiming several rooms of a million dollar home is for office use then that's a whole 'nother story entirely.

 

[The White Coat Investor]

One of my partners today tried to convince me it was legit to deduct her commute when she comes to the hospital for a meeting, but not for a shift. As if the IRS cares what you're going to work to do. She said her "very conservative accountant" approved it. He's apparently not conservative enough because it is clearly commuting miles!

 

[Birdstrike]

People. Please, get a tax accountant for God's sake. You can afford it. SDN is not the place for medical advice and definitely not the place for tax-law advice.

 

[styphon]

Yes on cell phones and Internet. You have to estimate your business use. I'm not quite sure you'd document it but we aren't talking ridiculous sums so it doesn't have same scrutiny as home offices or transportation expenses.

For my own personal use, how would you estimate that? "I use 53% of the time on my phone for business" - how would you defend this if audited? Call records?

 

[The White Coat Investor]

Yes, that's how you'd defend it. I mean lose the audit. Because you probably would.

 

[The White Coat Investor]

People. Please, get a tax accountant for God's sake. You can afford it. SDN is not the place for medical advice and definitely not the place for tax-law advice.

Waahhh waaaahhh taxes are so hard. I can't possibly learn how to fill out a 1040EZ without a CPA.

 

[two guys]

Accountant or not, it is worth knowing a some general guidelines for travel, home office etc. The IRS has several publications about mileage, home office, etc. Mike Piper (the oblivious investor blog) has an 100 page book that's about $15 for independent contractor taxes that is an easy but worthwhile read.

 

[Birdstrike]

Waahhh waaaahhh taxes are so hard. I can't possibly learn how to fill out a 1040EZ without a CPA.

My taxes are pretty complicated, actually. Multiple states. Corporate returns. Complicated enough that I'd rather be out for a jog, while someone else deals with it. I could certainly do it on my own if I wanted the headache. But I don't. I also choose to pay someone to mow my lawn, which I could easily do on my days off, if I wanted to. But I've worked hard enough, long enough, so that I can relax on my days off and pay someone else to have the headache. It's personal preference.

Regardless, I still think it's better to get tax-law advice from a professional, as opposed to an anonymous Internet forum. Again, it's a personal preference.

 

[The White Coat Investor]

My taxes are pretty complicated, actually. Multiple states. Corporate returns. Complicated enough that I'd rather be out for a jog, while someone else deals with it. I could certainly do it on my own if I wanted the headache. But I don't. I also choose to pay someone to mow my lawn, which I could easily do on my days off, if I wanted to. But I've worked hard enough, long enough, so that I can relax on my days off and pay someone else to have the headache. It's personal preference.

Regardless, I still think it's better to get tax-law advice from a professional, as opposed to an anonymous Internet forum. Again, it's a personal preference.

If the darned CPAs would get the advice right, I'd agree with you. I keep getting emails from docs stating their CPA doesn't know what a backdoor Roth is, so when the client teaches them they go, "Wow, that's really cool!" How much should you have to pay to educate your tax preparer on how your taxes should look?

Don't get me wrong, I'm all for paying someone else to do stuff for me that I don't want to do or can't do or would rather use my time to do something else instead. But you have to differentiate a bit between your return and that of a typical resident. I could do my resident tax return in about 8 minutes. 1040-EZ only has 14 lines. You could put it on an index card.

The interesting thing about taxes is they usually become gradually more complicated, as you move into your career. But you really usually only have to learn one new thing a year, and the rest is exactly the same as last year. So in many ways, you know your own tax situation better than somebody else who prepares 1000 returns a year.

Even if you pay somebody once, it pays to see what they did, figure out why, and then just replicate it on your own the next year.

 

[styphon]

If the darned CPAs would get the advice right, I'd agree with you. I keep getting emails from docs stating their CPA doesn't know what a backdoor Roth is, so when the client teaches them they go, "Wow, that's really cool!" How much should you have to pay to educate your tax preparer on how your taxes should look?

Don't get me wrong, I'm all for paying someone else to do stuff for me that I don't want to do or can't do or would rather use my time to do something else instead. But you have to differentiate a bit between your return and that of a typical resident. I could do my resident tax return in about 8 minutes. 1040-EZ only has 14 lines. You could put it on an index card.

The interesting thing about taxes is they usually become gradually more complicated, as you move into your career. But you really usually only have to learn one new thing a year, and the rest is exactly the same as last year. So in many ways, you know your own tax situation better than somebody else who prepares 1000 returns a year.

Even if you pay somebody once, it pays to see what they did, figure out why, and then just replicate it on your own the next year.

I went to accountant for tax help, she had no idea what a backdoor IRA was or how it applies to taxes. I ended up walking out and doing my own taxes.

 

[deleted109597]

Mine knows the backdoor Roth. Mine only charges $300. It's worth more than 90 minutes of my time.
I do mow my own lawn though.

 

[Bostonredsox]

My taxes are pretty complicated, actually. Multiple states. Corporate returns. Complicated enough that I'd rather be out for a jog, while someone else deals with it. I could certainly do it on my own if I wanted the headache. But I don't. I also choose to pay someone to mow my lawn, which I could easily do on my days off, if I wanted to. But I've worked hard enough, long enough, so that I can relax on my days off and pay someone else to have the headache. It's personal preference.

Regardless, I still think it's better to get tax-law advice from a professional, as opposed to an anonymous Internet forum. Again, it's a personal preference.

Agree. That's why I don't clean my own gutters, paint my house, resurface my driveway, etc. Because in the time it takes me to do it, I could have payed someone $50 and made $200 if I was working. unless it's something I do purely because I enjoy doing it, building my kids swingset for example, I generally pay someone to do it as my return on my investment, my investment being my time working a shift, pays far more then I pay someone else to do that job. And I like not doing work during my time off.

I could do my taxes sure, they're not hard. But with the time it takes me to do them it would Be better spent practicing my profession, I will come out ahead. Plus I trust my tax guys math and knowledge of the tax laws more than my own at this point, and it's not worth making mistakes that would cost me money or worse get me audited.

On another note, I am considering becoming a pure IC hospitalist doing primarily nights when my contract ends, the locum rates are just so high now in remote areas. Any advice on a good site to start learning about the tax stuff, incorporation, expenses and such? I'm doing some locums 1099 work now on top of my main w2 job but it's just side gigs now, but I make twice as much doing those then my base shifts so thinking about pure locums. Curious what the average cost is for family plan life/medical/dental/short and long term disability. The difference in pure salary for base pay for w2 and locums is almost $250k

 

[la gringa]

i met with an accountant to know the playing field as an IC - what i can deduct etc - prior to switching to IC. it is not THAT complicated for me as i don't own real estate, am single, etc... and in a perverse way i sort of enjoy the bookkeeping and whatnot.

most of us would double check that sort of thing anyway.... i have a few spreadsheets i maintain, and keep lots of receipts. dropbox FTW there... and the new phone scanners etc. luckily a lot of what you keep is electronic anyway.

so i paid her for her time then and will about mid-year.

you should probably be using a financial planner anyway for IRA related issues... fortunately i have family who are fairly expert and have been self-educating for a while (due to urging by said family), and none of it is that difficult.

that being said - i also have a maid and a trainer, b/c some things you do just need/want help with, and having the expendable income is super nice in those cases!

 

[The White Coat Investor]

I could do my taxes sure, they're not hard. But with the time it takes me to do them it would Be better spent practicing my profession, I will come out ahead. ....Any advice on a good site to start learning about the tax stuff, incorporation, expenses and such?

Don't get me wrong. I'd love to pay someone else to clean my toilets. But I find it funny that in one sentence you say you don't want to do your taxes and in the next you say you want to learn more about taxes. The very best way to learn more about taxes is to do your taxes. I don't do my own taxes to save money. I do my own taxes to know the tax code. Like you, I'd be better off working a shift and paying someone else to do data entry.

I do know a good site that discusses "tax stuff, incorporation, and expenses" though. It covers some personal finance,insurance, and investing stuff too. Perhaps you've heard of it.

 

[Bostonredsox]

Lol I suppose I asked for that Jim

 

[Birdstrike]

The other stuff you mentioned, you must make a DIY website on that:

I'd love to pay someone else to clean my toilets. But...

 

[The White Coat Investor]

The other stuff you mentioned, you must make a DIY website on that:

I'm sure it will be super popular. I could sell ads to toilet bowl cleaners.