Stank811

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Ok same here. Sounds good to me.
Regardless, none of this shi-t applies to doctors so its a waste of time. No physician will benefit from this as it's written in the bill currently. Maybe something will change in Congress but I highly doubt it since doctors have crap lobbies.

If you are a PP group depending how your group is structured it will have implications. What is considered pass through physician salary vs pass through corporate profits? Can you restructure your revenue to help improve your businesses bottom line? Is it worth while for your group to consider diversifying your business to service areas you dont currently provide under this new tax law that you may out source currently.

I am not an accountant but those are some general questions to ask.
 

facted

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What I have learned from reading more about this bill is that we should have all either gone into Oil and Natural gas, lobbying, or politics. Then you get the write whatever tax code you'd like and instead of structuring your job around the tax code, you just get to structure the tax code around your job. So much simpler that way.
 
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DrCommonSense

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If you are a PP group depending how your group is structured it will have implications. What is considered pass through physician salary vs pass through corporate profits? Can you restructure your revenue to help improve your businesses bottom line? Is it worth while for your group to consider diversifying your business to service areas you dont currently provide under this new tax law that you may out source currently.

I am not an accountant but those are some general questions to ask.

Dont think you will be able to structure it in any fashion to obtain a tax break. The law specifically excludes small business lawyers, accountants and physicians.

Ask your accountant to find out if there is any method to get around it and lets us all know. I will surely be willing to refer business to whoever can figure that puzzle out.
 

lord_jeebus

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Dont think you will be able to structure it in any fashion to obtain a tax break. The law specifically excludes small business lawyers, accountants and physicians.

Ask your accountant to find out if there is any method to get around it and lets us all know. I will surely be willing to refer business to whoever can figure that puzzle out.

This is the best thing I've found so far regarding the Section 199A deduction, although it is still unclear: Sec 199A Qualified Business Income Deduction: Big Savings for Some

It looks like the deduction is available to physicians with taxable income (1040 line 43) of less than $157500 if single or $315000 if married. Difficult for a single anesthesiologist. If you're married with limited spousal income and employ aggressive measures to reduce taxable income such as maximized 401(k) contributions, you may be able to take advantage.

For instance, if you're married, your spouse doesn't work, you have 1099 income that flows into your solo S corp, you make maximum contributions to an individual 401(k) and take the newly doubled standard deduction, you could take in $393000 per year and still take advantage of the new deduction:

(please correct me if I make an obvious mistake)

1099 income: $393000 to S Corp
401(k) employee contribution: $36000
401(k) employer contribution: $18000
Standard deduction: $24000
1040, line 43: $315000
W-2 salary paid to self from S corp: $250000 (if you can defend this amount as appropriate) ($54000 of this ends up in the 401(k))
K-1 income: $393000 - $250000 = $143000
New 20% deduction on pass-through income: $143000 x 20% = $28600
New marginal tax rate: 35%
So tax savings = $28600 x 35% = $10010
 

caligas

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This is the best thing I've found so far regarding the Section 199A deduction, although it is still unclear: Sec 199A Qualified Business Income Deduction: Big Savings for Some

It looks like the deduction is available to physicians with taxable income (1040 line 43) of less than $157500 if single or $315000 if married. Difficult for a single anesthesiologist. If you're married with limited spousal income and employ aggressive measures to reduce taxable income such as maximized 401(k) contributions, you may be able to take advantage.

For instance, if you're married, your spouse doesn't work, you have 1099 income that flows into your solo S corp, you make maximum contributions to an individual 401(k) and take the newly doubled standard deduction, you could take in $393000 per year and still take advantage of the new deduction:

(please correct me if I make an obvious mistake)

1099 income: $393000 to S Corp
401(k) employee contribution: $36000
401(k) employer contribution: $18000
Standard deduction: $24000
1040, line 43: $315000
W-2 salary paid to self from S corp: $250000 (if you can defend this amount as appropriate) ($54000 of this ends up in the 401(k))
K-1 income: $393000 - $250000 = $143000
New 20% deduction on pass-through income: $143000 x 20% = $28600
New marginal tax rate: 35%
So tax savings = $28600 x 35% = $10010

A few things:

Good:

You can bump up the W2 income (while staying at a taxable income of 315k) even higher with HSA deduction and maybe self employed health premiums.

Bad:

The max you can save on this pass through deduction is actually about $15k

AMT may wipe out this deduction anyway
 

teeva

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The savings are also wiped away with loss of SALT deductions in high tax states and owning a slightly above average house.
 
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teeva

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What I have learned from reading more about this bill is that we should have all either gone into Oil and Natural gas, lobbying, or politics.
You should also blame yourself for not being born rich.
 

BLADEMDA

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This is the best thing I've found so far regarding the Section 199A deduction, although it is still unclear: Sec 199A Qualified Business Income Deduction: Big Savings for Some

It looks like the deduction is available to physicians with taxable income (1040 line 43) of less than $157500 if single or $315000 if married. Difficult for a single anesthesiologist. If you're married with limited spousal income and employ aggressive measures to reduce taxable income such as maximized 401(k) contributions, you may be able to take advantage.

For instance, if you're married, your spouse doesn't work, you have 1099 income that flows into your solo S corp, you make maximum contributions to an individual 401(k) and take the newly doubled standard deduction, you could take in $393000 per year and still take advantage of the new deduction:

(please correct me if I make an obvious mistake)

1099 income: $393000 to S Corp
401(k) employee contribution: $36000
401(k) employer contribution: $18000
Standard deduction: $24000
1040, line 43: $315000
W-2 salary paid to self from S corp: $250000 (if you can defend this amount as appropriate) ($54000 of this ends up in the 401(k))
K-1 income: $393000 - $250000 = $143000
New 20% deduction on pass-through income: $143000 x 20% = $28600
New marginal tax rate: 35%
So tax savings = $28600 x 35% = $10010

Where is the health plan? Malpractice? HSA? Also, some Scops include their wives as "secretaries" and pay them a small wage with 401K benefits. So, maybe the real 1099 gross income number is closer to $430-$440K.
 

DrCommonSense

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Where is the health plan? Malpractice? HSA? Also, some Scops include their wives as "secretaries" and pay them a small wage with 401K benefits. So, maybe the real 1099 gross income number is closer to $430-$440K.

Can you be audited for this?
 

Man o War

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Can you be audited for this?

Sure. But this is a fairly common practice amongst physicians with offices as far as I’ve seen. Their wives will act as office managers, nurses, etc. As long as you abide by employer laws like paying necessary payroll taxes, they can’t do much about it.
 

DrCommonSense

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Sure. But this is a fairly common practice amongst physicians with offices as far as I’ve seen. Their wives will act as office managers, nurses, etc. As long as you abide by employer laws like paying necessary payroll taxes, they can’t do much about it.

Thats a good idea to look into.
 

BLADEMDA

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But then THEY get taxed on that income.

They pay them a MINIMAL wage but FULL 401K plan contribution by the employer (S Corp). I agree a cash balance plan is good idea but only if the total revenue exceeds $440K for the company. Cash Balance plans have high fees associated with them.
 
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promethius

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So with the recently passed tax bill and the changes in the tax rules, what is the general consensus regarding which incorporation route to take for a physician who wants to start up his/her own office-based private practice with the end goal of minimizing taxes and saving up for retirement? I know there are many variables, but in general, would a sole proprietorship, LLC, S-Corp, professional corporation, or C-Corp currently be the best route to take?
 

facted

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So with the recently passed tax bill and the changes in the tax rules, what is the general consensus regarding which incorporation route to take for a physician who wants to start up his/her own office-based private practice with the end goal of minimizing taxes and saving up for retirement? I know there are many variables, but in general, would a sole proprietorship, LLC, S-Corp, professional corporation, or C-Corp currently be the best route to take?
I almost never recommend an accountant, but this one seems like it requires professional advice.
 
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caligas

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I almost never recommend an accountant, but this one seems like it requires professional advice.

I was going to say that too, but nothing wrong with a bit of discussion on it I guess, just take everything with a grain of salt. Definitely a complex issue.

Looks like I will save about 5k a year just on the S Corp issue (we are an s Corp) and maybe another 5k on the other factors combined minus losses due to SALT.
 
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