Life is a game...

[coprolalia]

As I'm sitting here, freezing my a** off, and contemplating my change in earnings over the last half of last year, it finally struck me...

This is all bullsh*t.

What I mean by that is that, essentially, things will never really change big time in this country. There will be taxes. There will be unfairness - gross unfairness. There will be leeches. There will be people who take advantage of the system. There will be victims of the system.

It finally struck me that it's all about how well you play the game... well, I mean, we all already know that, but there is often a lot of sitting around and thinking about that and not really doing anything about it... by a lot of us.

So, I contemplated getting an accountant last year. I have a good lawyer and an investment guy, but I didn't fully commit to getting an accountant. A slick accountant.

You see, this year I'm not going to get screwed. It's early in the season. I'm going into maximum protection mode. I'll admit, beyond my fairly good understanding of investment principles, I have at best a cursory understanding of taxes and the tax laws. I just don't have time to be an expert at that.

I think it is prudent, at this point, to get a good accountant, someone who can work with my investment guy, to maximize my protection against what are excessive and ridiculous taxes on those of us who work harder, longer hours than the vast majority of the populous, many of whom never pay us for our services, while living under the continuous specter of being sued by the same.

No more.

I'm going to - legally - attempt this year to circumvent as much of these ridiculous taxes, and looming increase in taxes, as possible. This is my personal revolt against the impending socialist state in this country... one that we're already halfway there.

Get an accountant. Have your lawyer, accountant, and financial planner work in concert together. Even if I break even on the money I spend on those three versus what goes to Uncle Sam, I'd still rather have it going to them working for me instead of some cohort of unwed mothers sitting around watching Maury and wondering who their baby-daddy is.

-copro

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[amyl]

i hear you copro. but, i have an accountant and i dont think he saves me any money. let us know if you have a different experience...

 

[coprolalia]

i hear you copro. but, i have an accountant and i dont think he saves me any money. let us know if you have a different experience...

Yeah, there are a lot of accountants out there who simple do only that: accounting (a.k.a., "counting the beans"). They'll do your taxes for you, they'll file your forms, they'll handle the paperwork, etc. The value in that is that you don't have to deal with all the b.s. of doing that crap, and it spreads the blame if you have something go wrong. I don't consider this CPA a true "accountant" as much as I consider them a "tax preparer". And, yes, I've used these types of accountants in the past.

What I'm talking more about, I guess, is a true "tax consultant" type accountant. This person not only does all of the above, but they help you strategize, along with your financial planner, ways to legally place your money in places that the government can't touch it. This can include things like charitable donations to causes you want money to go to as well as ways to better optimize tax shelters.

That's all I'm talking about. I purchased a condo recently, among other things, to get the write-off for a second home in 2009. That's what I'm talking about. I'm not an expert on the ever-changing tax laws. It behooves me to get someone who really is... as it does everyone else.

Would love to hear some of the other attending's opinions on this subject.

-copro

 

[netrome]

I have had three accountants the first was liberal with the deductions. The next one was a little more conservative, and now I have and accountant who very strict and by the rules. While just like you I hate the thought of giving another cent to the government. I am far more comfort able with my last accountant.

We are in a profession where we are required to have the continued blessing of the government in the form of the State Medical licensing board, The DEA, the State DEA, and Medicare in order to continue to practice. If you get an aggressive accountant and push the line you are threatening you livelihood. State Medical boards are cracking down on the smallest of offenses.


I worked with an attending who pushed the tax laws to the limit. He was audited and lost. Then he sued the IRS and won. The IRS ignored the judgment and refused to give back his seized property. This whole episode has cost him big bucks and could have been avoided if he didn't push the line.

 

[deleted126335]

Yeah, there are a lot of accountants out there who simple do only that: accounting (a.k.a., "counting the beans"). They'll do your taxes for you, they'll file your forms, they'll handle the paperwork, etc. The value in that is that you don't have to deal with all the b.s. of doing that crap, and it spreads the blame if you have something go wrong. I don't consider this CPA a true "accountant" as much as I consider them a "tax preparer". And, yes, I've used these types of accountants in the past.

What I'm talking more about, I guess, is a true "tax consultant" type accountant. This person not only does all of the above, but they help you strategize, along with your financial planner, ways to legally place your money in places that the government can't touch it. This can include things like charitable donations to causes you want money to go to as well as ways to better optimize tax shelters.

That's all I'm talking about. I purchased a condo recently, among other things, to get the write-off for a second home in 2009. That's what I'm talking about. I'm not an expert on the ever-changing tax laws. It behooves me to get someone who really is... as it does everyone else.

Would love to hear some of the other attending's opinions on this subject.

-copro

Depends on how aggressive your personal and your corporate accountant want to be.

On the personal side, there is not much given on how we are paid and how much we make and the realities of the AMT. The big one is the retirement plan. Many defined contribution plans let you shelter up to $49,000 this year. You can donate appreciated stock to charity as opposed to writing a check, invest in tax efficient vehicles. If you have kids and plan to pay for their higher education 529 plans are fantastic. Many advocate cash value life insurance for the tax benefit (I don't) Purchasing a big home or a vacation home solely or mostly for the tax deduction is not wise IMO. You should learn about tax smart investing, i.e. put tax inefficient assets in your tax deferred account and tax efficient vehicles in your taxable account and tax loss harvest throughout the year. If you live near a state border, deciding to live on which side of the line can make a big difference. Also choosing which town to buy your house can sometimes make a big difference.

On the corporate side, using pre tax dollars, there are the usual things like flex spending accounts, CME allowances for meetings, percentage of cell phone, and internet service write offs, Home fax machine and second fax line, Write off a percentage of home computer or laptop, percentage of car leases HOWEVER the strict rules of these things are FAR less generous than many docs claim. They frequently have to be requirements of your job in your employment agreement and the IRS has to find them reasonable. If you want to get fancy and are part of a big group where the partners make big bucks, Defined benefit plans, captive insurance companies, nonqualified plans through your practice can work but they have BIG upfront and maintenance costs and take a long time (10 years plus) for the benefits of tax deferral to overcome these costs. You have to have a lot of confidence in the future of your current employment arrangement and salary to consider them IMO.

Interesting, although not really relevant to your post is this tax court case. An anesthesiologist vs. the IRS in a case on the home office deduction. The doc did his own billing @ home in a room dedicated as a home office. He attempted to write off part of his home as a business expense. He took it all the way to the US Supreme court. He lost.

http://supreme.justia.com/us/506/168/

FWIW I am among the least aggressive of of my partners.

 

[Narcotized]

.

 

[coprolalia]

Dr. Doze:

Good post. I've pretty much maxed my contributions to pre-tax in my Roth. I'm looking for more creative shelters, deferred compensation plans, etc. Interesting case, too.

Netrome:

The accountant who was audited and lost... you had him on the hook for his services, right? My impression is that, although you'll probably still have to pay the back taxes of what was owed, the courts generally aren't as punitive to the individual for whom the CPA filed, i.e. large tax penalty fees are waived after the payback. Good point, though, about having a professional license that can be f-ed with.

Narcotized:

Nothing is going to change that drastically in this country. It can't. Fact is, we'll continue deficit spending until we get out of this current ****-storm in Afghanistan and finally close the door on Iraq. The rest of the world can't screw with our economy too much. China is just making a bad investment. But, we will have our taxes raised, especially on the high-enders like us.

I can't (and won't) list the full details, but my parents battled the IRS a few years ago, similarly, in that they filed their taxes correctly, Uncle Sam insisted that they hadn't, and the GUBmint made their lives hell for a while. It didn't make it's way to court, but they were issued a detainer AFTER they'd cleared it with the IRS office and had all the documentation to prove that they had. The IRS pursued this for over six months. It wasn't until they hired a lawyer did it stop... more cost. They were always right in their position. They didn't owe the GUBmint anything. Yet, they had to pay a lawyer and waste a sh*tload of time proving that point.

Screw 'em.

-copro

 

[dhb]

I'm going to - legally - attempt this year to circumvent as much of these ridiculous taxes, and looming increase in taxes, as possible. This is my personal revolt against the impending socialist state in this country... one that we're already halfway there.

My lifetime goal

 

[kazuma]

Acquiring a good CPA is essential for financial success IMHO. Like others have said, there are some CPA's that will just file your taxes and there are others which bend the rules and leave you open to serious consequences. Ideally you want to find an honest, hard working accountant that is very knowledgeable about tax codes, and your profession etc. One place to start is by asking other local physicians about who does their work. However, you may find that people can be very loyal to their CPA even though they aren't doing the greatest job.

A good CPA is definitely worth the money. The good ones I know charge upwards of $300/hr or more depending on the type of work they are doing. Expensive, but worth it if they save you thousands of dollars in taxes annually.

Feel free to PM me if you would like the name of an excellent firm that does a fair share of physician's taxes.

 

[deleted126335]

I'm looking for more creative shelters, deferred compensation plans, etc.


-copro

-Be very careful.
-Get a second opinion from someone you are paying by the hour to evaluate any proposal. Preferably from someone who doesn't know the person who makes you a proposal.
-Spend a few hours reading. I started to learn about personal finance and investing about 2 years out of residency after I had been sold something totally inappropriate for my circumstances. I recommend starting here:

http://www.bogleheads.org/wiki/Main_Page

 

[coprolalia]

-Be very careful.
-Get a second opinion from someone you are paying by the hour to evaluate any proposal. Preferably from someone who doesn't know the person who makes you a proposal.
-Spend a few hours reading. I started to learn about personal finance and investing about 2 years out of residency after I had been sold something totally inappropriate for my circumstances. I recommend starting here:

http://www.bogleheads.org/wiki/Main_Page

Great advice. You, too, Kazuma.

-copro

 

[maceo]

-Be very careful.
-Get a second opinion from someone you are paying by the hour to evaluate any proposal. Preferably from someone who doesn't know the person who makes you a proposal.
-Spend a few hours reading. I started to learn about personal finance and investing about 2 years out of residency after I had been sold something totally inappropriate for my circumstances. I recommend starting here:

http://www.bogleheads.org/wiki/Main_Page

when are you gonna learn that none of these boneheads know anything? You can put your money in anything and itll probably beat the best money managers.. Dont give your money to anyone to invest. get an online broker)scottrade, fidelity, schwab and do it yourself..

 

[maceo]

i agree.. life is a game.. Just find your angle.. and exploit the **** out of it.. everything else is noise Dont get involved with questionablewomen who are after a lifestyle and more importantly dont have any kids with said questionable woman.. and and live way below your means..

 

[deleted126335]

when are you gonna learn that none of these boneheads know anything? You can put your money in anything and itll probably beat the best money managers.. Dont give your money to anyone to invest. get an online broker)scottrade, fidelity, schwab and do it yourself..

You are absolutely,verifiably, totally, completely wrong.

 

[notinkansas]

That is why I engaged this firm to do tax planning.

http://www.tacpas.com/

Tax planning goes a bit beyond tax preparation. They looked at all my stuff and made recommendations for strategies I could implement to keep as much of my money as possible out of Uncle Sam's hands. The owner also seems to have an excellent grasp as to what is going on in the political arena. Based on your posts, I think you might like them.

 

[Narcotized]

You are absolutely,verifiably, totally, completely wrong.

Wrong in that most doctors will end up doing poorly investing on their own? Perhaps.

Wrong in that most money managers absolutely suck, know very little, and all say the same vague general concepts yet invariably do worse than the market averages? Oh he's dead on the money right with that one.

 

[deleted126335]

Wrong in that most doctors will end up doing poorly investing on their own? Perhaps.

Wrong in that most money managers absolutely suck, know very little, and all say the same vague general concepts yet invariably do worse than the market averages? Oh he's dead on the money right with that one.

No. He and you are right about that.

He's wrong in saying that by getting an account at scottrade, schwab, etc. and trading on your own that most physicians can do as well as low cost passive strategies, disciplined rebalancing, and tax efficient portfolio management.

 

[cfdavid]

when are you gonna learn that none of these boneheads know anything? You can put your money in anything and itll probably beat the best money managers.. Dont give your money to anyone to invest. get an online broker)scottrade, fidelity, schwab and do it yourself..

I agree with this. MOST financial planners are like talking heads for the mutual fund industry. They get taken out to dinner by the mutual fund reps where they hear the ages old mantra of buy and hold over the long term.....

They show them charts (and then they, you) about putting in 10K and over 10 years, how their fund has outperformed the SP 500 and how it'll be worth 30K plus with interest and dividends reinvested.... BLAH, BLAH, BLAH....

THAT BEING SAID, it's CRITICAL where you get information. I've found that some "alternative" sources of information regarding markets and even geopolitics (that effect markets) to be very helpful and grounding. This is important given the disproportion of Bulls vs. Bears on shows like CNBC etc.

cf

 

[cfdavid]

No. He and you are right about that.

He's wrong in saying that by getting an account at scottrade, schwab, etc. and trading on your own that most physicians can do as well as low cost passive strategies, disciplined rebalancing, and tax efficient portfolio management.

Perhaps a bit contradictory to my previous thread, but a decent, passive way to go would be to look at Vanguard. No load and they have a TON of diverse investment options in the form of mutual funds.

 

[cfdavid]

Wrong in that most doctors will end up doing poorly investing on their own? Perhaps.

Wrong in that most money managers absolutely suck, know very little, and all say the same vague general concepts yet invariably do worse than the market averages? Oh he's dead on the money right with that one.

How many people with decent sized accounts (i.e. those that SHOULD get some attention) had brokers/planners calling them with words of caution, and maybe even recommending selling into this last crash??? Very few, I'm certain. In the meantime, they sit on their asses, not knowing much more than you do (aside from a bit of a gift for gab in financialese) while you're assets continue depreciating.

Most planners have little ability (***or incentive) to think outside of the box.