Death and Taxes

Started by kerrydds06
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kerrydds06

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I'm no accountant, but I'm tring to figure this out, so say I made 150G my first year, next year,
I pay 33% FED income tax
http://taxes.yahoo.com/rates.html
This is $49,500 minus exemptions of about i dunno $5G????
That is still over$40G in TAXES!!!!!

This is INSANE.

Then there is State taxes (7.7% here in NY)
http://www.taxadmin.org/fta/rate/ind_inc.html
This is $11550 !!!!! ( I'm moving to Texas or Florida!)

Then there is
SALES TAX
PROPERTY TAX etc

What is my actual annual budget? I know there are a lot of factors, but I'm guessing less than 75G??

Any accountants out there to better crunch numbers or give some better idea of what to expect?

How can we LEGALLY reduce the amount of taxes we pay? (loop holes, exemptions, deductions etc)
 
I read on CNBC.com long time ago that if you died in 2009, you'll save loads of money for your children & your estate. So, plan accordingly
 
oh yeah, cost of living is getting really high. I'm hari kari -ing when the new season of Family Guy ends, wanna join me?
 
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You can buy your new Beemer through your office as a business expense. You can fly your whole staff to Las Vegas(Florida,Hawaii,Tahoeetc...) for that Dental covention and deduct it.

I know you can set aside some pretax dollars for retirement each year. That is just the tip of the iceburg. There are many ways you can chip away at that 40K tax you pay. A good accountant will know them all.
 
ackbar said:
oh yeah, cost of living is getting really high. I'm hari kari -ing when the new season of Family Guy ends, wanna join me?
Click to expand...

So this is how the rumors of dentist suicide rates get started...

Ackbar, didn't you lead the Rebel Fleet at the Battle of Endor?
 
kerrydds06 said:
This is $11550 !!!!! ( I'm moving to Texas

)
Click to expand...

Texas will hit you with high property tax rate, school tax, MUD tax and other taxes on your house. 😀 😀 😀 😀 You will be ok if living in an apartment. :laugh: :laugh:
 
kerrydds06 said:
I'm no accountant, but I'm tring to figure this out, so say I made 150G my first year, next year,
I pay 33% FED income tax
http://taxes.yahoo.com/rates.html
This is $49,500 minus exemptions of about i dunno $5G????
That is still over$40G in TAXES!!!!!

This is INSANE.

Then there is State taxes (7.7% here in NY)
http://www.taxadmin.org/fta/rate/ind_inc.html
This is $11550 !!!!! ( I'm moving to Texas or Florida!)

Then there is
SALES TAX
PROPERTY TAX etc

What is my actual annual budget? I know there are a lot of factors, but I'm guessing less than 75G??

Any accountants out there to better crunch numbers or give some better idea of what to expect?

How can we LEGALLY reduce the amount of taxes we pay? (loop holes, exemptions, deductions etc)
Click to expand...


I beseech you. Find a professional accountant and never ever handle your own finances. It costs you a couple hundred bucks and will apperently save your tens of thousands of dollars. A good financial advisor will go beyond taxes and tell you how much you need to be spending on home mortgages and other tax deductible expenses for your income bracket. You can find a guy to handle both personal and business affairs. Until you hit your stride with all matters finacial, or at least marry someone who has. Plus there's the child tax credit, so if you have a couple dozen kids, thant will help. I suggest you get crackin'.
 
Just imagine how the people making 1/3 of your $150k feel.

But yes, pay an expert to do your financials. If you can make $100/hr working, pay someone else to do as much of your other work at a lower rate as possible so you can spend more time making $100/hr. It may not even be worth your time to pay your bills yourself, much less clean your house or do your financials.

Assuming that you'll be operating out of your own corporation, don't forget about your annual general meetings which you can hold at the fanciest place of your choice and the ability to income smoothen through your corporation. Put your wife on the payroll (though be sure to keep it legit).

Writing off the car you take to and from work may be a bit of a stretch.

Also, doesn't the tax rate work so that you pay 10% on the first $X000, then 15% on the next $Y, or do you pay the same rate for all your income? Sorry, I'm a Canadian and we have marginal tax rates here.

Don't forget about city/county taxes depending on where you live.
 
SomeGuy said:
Just imagine how the people making 1/3 of your $150k feel.

But yes, pay an expert to do your financials. If you can make $100/hr working, pay someone else to do as much of your other work at a lower rate as possible so you can spend more time making $100/hr. It may not even be worth your time to pay your bills yourself, much less clean your house or do your financials.

Assuming that you'll be operating out of your own corporation, don't forget about your annual general meetings which you can hold at the fanciest place of your choice and the ability to income smoothen through your corporation. Put your wife on the payroll (though be sure to keep it legit).

Writing off the car you take to and from work may be a bit of a stretch.

Also, doesn't the tax rate work so that you pay 10% on the first $X000, then 15% on the next $Y, or do you pay the same rate for all your income? Sorry, I'm a Canadian and we have marginal tax rates here.

Don't forget about city/county taxes depending on where you live.
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If you make 1/3 of that 150K your tax bracket drops significantly.

The middle one-fifth of taxpayers, with an average income of $39,100, pay just 5.4 % of their earnings in federal income taxes.

The wealthiest 1% pay more than $240 billion per year, nearly 1/3 of all federal income taxes. The wealthiest 10%, pays upward of $460 billion, roughly 2/3 of all income taxes in our country. And the wealthy are the only group whose tax burden has increased over the past decade. So all that crap about how the rich are getting it easy from the federal govt is pretty much bogus. The lower 50% of the taxpayers pay less than 4% of the total.

As far as writing off a vehicle's lease that you use to commute, it is perfectly legal. Anyone that owns their own practice should look into it. You can also lease an already purchased vehicle to yourself and write off the vehicle that way as well. Of course you would get flagged if you lease your Kia to yourself for $1500 a month.
 
kato999 said:
If you make 1/3 of that 150K your tax bracket drops significantly.

The middle one-fifth of taxpayers, with an average income of $39,100, pay just 5.4 % of their earnings in federal income taxes.

The wealthiest 1% pay more than $240 billion per year, nearly 1/3 of all federal income taxes. The wealthiest 10%, pays upward of $460 billion, roughly 2/3 of all income taxes in our country. And the wealthy are the only group whose tax burden has increased over the past decade. So all that crap about how the rich are getting it easy from the federal govt is pretty much bogus. The lower 50% of the taxpayers pay less than 4% of the total.

As far as writing off a vehicle's lease that you use to commute, it is perfectly legal. Anyone that owns their own practice should look into it. You can also lease an already purchased vehicle to yourself and write off the vehicle that way as well. Of course you would get flagged if you lease your Kia to yourself for $1500 a month.
Click to expand...



As far as I know you can purchase a vehicle for work but there is one thing you have to consider. First you can only write off the percentage of the vehicle that you use for work and unfortunately your commute to and from work do not count. Now if you have two offices the commute between the two is tax deductable but as far as I know (what my accountant told me) the getting to and from work does not count. So I guess if you took your staff out to lunch a lot you could write off the .39$/mile but in reality for a profession like dentistry many times it is more work than it is worth.

What are some legal tax deductions are to form numerous corporations and use all of the tax benefits for each. For example, one corporation can own all of the funiture in the office and you can lease it to your practice. Another corporation can own the physical building and lease it to the practice. Another corporation can own the equiptment and lease it back, etc, etc. With a good accountant and finacial planner you can really reduce your tax burden.

And Kato, I am with you on the fact that the poor get off easy when it comes to taxes. Sure their lives might suck, but not on April 15.
 
kerrydds06 said:
How can we LEGALLY reduce the amount of taxes we pay? (loop holes, exemptions, deductions etc)
Click to expand...

Never, ever vote for a Democrat 😀 😉 :laugh: 😛

Being serious for a minute, with the help of a good, trusted accountant, you'll find a number of ways that you can legally decrease your tax burden (although you'll still be paying ALOT of tax dollars each and every year.)

If I remember my tax statistics correctly, WHEN you end up in the top 1% of all American income earners(roughly $250,000 a year), your demographic will account for roughly 70% of ALL collected tax dollars 😱

I know that every know and then one of my assistants will complain about taxes to my partner and I, and say something to the extent of "you guys shouldn't get tax breaks, you should pay more each year!" We then love to remind that assistant that what we each pay in taxes each year is 4 to 5 times more than that persons TOTAL pre-tax income per year 😱 That tends to quite that person down for a few weeks.

The unfortunate truth is that while you'll make ALOT of money in dentistry, you'll also pay good 'ol uncle Sam alot of money too
 
St. Appolonia said:
I beseech you. Find a professional accountant and never ever handle your own finances. It costs you a couple hundred bucks and will apperently save your tens of thousands of dollars. A good financial advisor will go beyond taxes and tell you how much you need to be spending on home mortgages and other tax deductible expenses for your income bracket. You can find a guy to handle both personal and business affairs. Until you hit your stride with all matters finacial, or at least marry someone who has. Plus there's the child tax credit, so if you have a couple dozen kids, thant will help. I suggest you get crackin'.
Click to expand...

Don't buy into the child tax credit bit. The early years seem good, but the long term net present value of the yearly stream of tax credits minus actual child raising expenses is a BIG NEGATIVE. I love my kids (all five) and would have them again, but not because of the tax breaks. The only rich folks that I know who do what I do never got married and never had kids. 🙂
 
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Another tax "issue" that you can fall into, and many small business people making over 100K/year are starting get hit by this, is what the government calls the Alternative Minimum Tax(AMT). It was originally designed by congress as a ways to get millionaires, who commonly avoid paying their full sum of taxes via large deductions, etc, to pay their full share of taxes. What is starting to happen more and more is small business owners who have large amounts of business expense deductions, can get hit with this AMT. Basically there are about 10 clauses where if you fall under them, the AMT applies. The unfortunate thing is that the name AMT is an oxymoron as my wife and I found out this past year.

For us this past year, since we both have a good amount of deductable business expenses (i.e. CE meeting travel, dry cleaning of work clothes, business lunches, etc, etc, etc) in addition to the standard deductions (i.e. child tax credit, mortage interest, charitable contributuions, etc), our total itemized deductions were more then 10% of our gross income. As our accountant was doing our taxes, his words went something like this "okay Dr J and wife, with all your deductions it appears that you'll be getting a refund from the federal government of about $1000! Wait, the computer is saying that you qualify for the AMT (I'm now thinking BIGGER refund not knowing at that point what the AMT is), and with the AMT applied, you now OWE the federal government just under $5000 😡 😱 😕 "

The part of this whole AMT that really, really angered me, is that even before the AMT was applied to our return, we had already paid over 6 figures in taxes 😱 😡 😡 Now when my assistants who pay around $5,000 in taxes and get refunds of over 2,000 tell me that I need to be taxed more and that "rich people" should be taxed at a higher rate, I really get angered. A flat tax rate for all income levels is what is fair. If you make more, you pay more and if you make less, you pay less. Plain and simple.
 
DrJeff - I've always appreciated your posts, as they are very insightful, and we don't see that many praticing dentists on this board. I have a quick question for you: Is your practice an S corp? If so, then I thought business expenses (CE travel, lunches, etc.) would simply be an expense of the corporation, and not "passed" to you (the stockholder/owner) as a deduction.

Perhaps I'm missing something here in my understanding.

Alternatively, if you know of any websites out there (other than dentaltown) that describes the different ways to structure a dental practice (S corp vs. C corp), feel free to pass those along.

Thanks, and if this is too much to answer, don't worry about it. I can continue digging on dentaltown to learn more!
 
I always thought a flat-tax sounded like the most fair option... at least in this way, yes, people who make more money are contributing more actual dollars, but everyone takes the same "hit" on tax day (ie the percentage of income paid would be the same...)

Although heck, if I was the person who knew how to make the US tax system perfect and fair, I'd run for president... :laugh:
 
DrJeff said:
Another tax "issue" that you can fall into, and many small business people making over 100K/year are starting get hit by this, is what the government calls the Alternative Minimum Tax(AMT). It was originally designed by congress as a ways to get millionaires, who commonly avoid paying their full sum of taxes via large deductions, etc, to pay their full share of taxes. What is starting to happen more and more is small business owners who have large amounts of business expense deductions, can get hit with this AMT. Basically there are about 10 clauses where if you fall under them, the AMT applies. The unfortunate thing is that the name AMT is an oxymoron as my wife and I found out this past year.

For us this past year, since we both have a good amount of deductable business expenses (i.e. CE meeting travel, dry cleaning of work clothes, business lunches, etc, etc, etc) in addition to the standard deductions (i.e. child tax credit, mortage interest, charitable contributuions, etc), our total itemized deductions were more then 10% of our gross income. As our accountant was doing our taxes, his words went something like this "okay Dr J and wife, with all your deductions it appears that you'll be getting a refund from the federal government of about $1000! Wait, the computer is saying that you qualify for the AMT (I'm now thinking BIGGER refund not knowing at that point what the AMT is), and with the AMT applied, you now OWE the federal government just under $5000 😡 😱 😕 "

The part of this whole AMT that really, really angered me, is that even before the AMT was applied to our return, we had already paid over 6 figures in taxes 😱 😡 😡 Now when my assistants who pay around $5,000 in taxes and get refunds of over 2,000 tell me that I need to be taxed more and that "rich people" should be taxed at a higher rate, I really get angered. A flat tax rate for all income levels is what is fair. If you make more, you pay more and if you make less, you pay less. Plain and simple.
Click to expand...

Tell your assitant if it was not for, she wouldn't have had a job. Yeah, all the rich people create the jobs. The 10/90 rule.

What state are you in? Is AMT for all the states?
 
Taxes....always a touchy subject, but on a board full of soon-to-be dentists at least we all agree for the most part.

It drives me absolutely crazy when my patients utter some remark about a fee or about how much money I will make in the future. First of all, I don't see a damn dime for what I do in school, so don't whine to me about it. I'm paying money for the chance to place that crown for you. And second, I did what anyone else could do, pay my way through undergrad and dental school while working my tail off. I can't stand when they utter some remark under their breath.

I guess the positive to take away from this is that it's good training for the future. You know, learning to bite my tongue instead of ramming the highspeed through their lip like I want to do sometimes.
 
ncalcate said:
DrJeff - I've always appreciated your posts, as they are very insightful, and we don't see that many praticing dentists on this board. I have a quick question for you: Is your practice an S corp? If so, then I thought business expenses (CE travel, lunches, etc.) would simply be an expense of the corporation, and not "passed" to you (the stockholder/owner) as a deduction.

Perhaps I'm missing something here in my understanding.

Alternatively, if you know of any websites out there (other than dentaltown) that describes the different ways to structure a dental practice (S corp vs. C corp), feel free to pass those along.

Thanks, and if this is too much to answer, don't worry about it. I can continue digging on dentaltown to learn more!
Click to expand...

We're an LLC, and there are aome business expenses where you'll combine personal and business, and upon the reccomendation of the accountant that my office uses, as a way to decrease our "audit potential" these types of business/personal expenses are best to charge to our personal income and then deduct the appropriate portion off of the taxes. I.E. last year the ADA meeting was in Orlando, I was at the meeting for 3 days and just on personal recreation for another 4. I charge almost everything on my personal VISA and deduct the appropriate amount on my itemized deductions
 
The best solution I've heard to this tax issue is the establishment of a national sales or value added tax along with the elimination of all forms of income taxes (coprorate and individual) and inheritance taxes. The tax would apply to purchases of all goods and services whether imported or produced in the USA. Yeah some folks might try to set up barter systems, but those are difficult to carry off on any significant scale. The reduced need for tax specialists and IRS agents would add value to the economy as well as creating an investment/labor friendly economic environment.
 
groundhog said:
The best solution I've heard to this tax issue is the establishment of a national sales or value added tax along with the elimination of all forms of income taxes (coprorate and individual) and inheritance taxes. The tax would apply to purchases of all goods and services whether imported or produced in the USA. Yeah some folks might try to set up barter systems, but those are difficult to carry off on any significant scale. The reduced need for tax specialists and IRS agents would add value to the economy as well as creating an investment/labor friendly economic environment.
Click to expand...

Yeah, I have heard of this too. Other country's would supposedly put more of their money in our economy as a tax shelter and this would help our deficit. They say the sales tax would have to be around 25-30% to offset the income tax which I think would be significant enough that the barter system would go to all new levels. Plus the poor, who do not pay much taxes now and have still have finacial trouble, would get totally screwed unless the gov't gave them an allowance which would of course become a huge headache.

In theory though, the national sales tax in lieu of income tax would be pretty nice for those especially in the 40% tax bracket.
 
DrJeff said:
The AMT is courtesy of our lovely Federal Government 😡 So from Maine to Alaska and everywhere inbetween, you've got the potential to qualify for it 😱
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god you whine a lot. Have you always been such a complaining little bitch? Or is it just a function of getting old?
 
kato999 said:
Yeah, I have heard of this too. Other country's would supposedly put more of their money in our economy as a tax shelter and this would help our deficit. They say the sales tax would have to be around 25-30% to offset the income tax which I think would be significant enough that the barter system would go to all new levels. Plus the poor, who do not pay much taxes now and have still have finacial trouble, would get totally screwed unless the gov't gave them an allowance which would of course become a huge headache.

In theory though, the national sales tax in lieu of income tax would be pretty nice for those especially in the 40% tax bracket.
Click to expand...

The annaul cost of running the Fed Gov stays around 19-20% of GNP. If that includes social security then we could subtract its own income stream (which is @12%) leaving us with maybe a 10% national sales tax on goods and services to cover the remaining cost of tthe Fed Gov. Then, to satisfy those who would be concerned about the impact on the poor, I imagine food, housing, health, clothing, transportation, and education expenses would be made exempt. So,then it becomes sort of a luxury tax which I agree would likley have to be in the 25-30% range.

Regarding bartering, the problem is that one will be limited to trading for goods and servidces between individuals and maybe a few small businesses at best. The larger companies wouldn't touch it. Even in the world of individuals and small businesses the issue of enforceable specific performance contracts between strangers becomes a problem. That is why money is so handy.
 
aphistis said:
I just took a quick look at your last half dozen posts or so. Speaking for myself, I can't say I'll really miss you.
Click to expand...

I just took a quick look at your avatar as well as your livejournal, and speaking for myself, damn! I'm glad I'm not you.
 
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