taxes

[premed85]

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do physicians have to pay taxes? Sorry i know this question is dumb but my friend was telling me that they don't, and i find that really hard to believe.

 

[ScooterBanks]

Yes, they most definitely do.

 

[Winged Scapula]

Uh, yeah.

I just got my first paycheck as an attending physician and believe me, I paid a LOT of taxes.

 

[Blade28]

Of course, why wouldn't they?

Doesn't virtually every profession pay taxes on their income? (Besides the shady characters, I mean.) 😕

 

[elwademd]

in some states, physicians can incorporate themselves (in most you would establish yourself as a s1 corporation), obtain a tax id, and have the tax id rather than a social security number for tax purposes. this, sometimes, can allow a physician to garner a lower tax rate as well as less likelihood of getting audited by the irs.

besides a potential savings on taxes, there are other business reasons that physicians choose to self incorporate. check out a site like www.bizfilings.org to learn more about it, and talk with your certified public accountant (cpa). self incorporation is not something that everyone does, but it's definitely something to think about.

 

[THP]

I'm pretty sure a resident with a family and now spouse income would pay close to zero taxes, based on our idiotic income tax scheme.

 

[Miami_med]

You'll be priveledged to pay more taxes than 99.99% of the world's population.

 

[Winged Scapula]

in some states, physicians can incorporate themselves (in most you would establish yourself as a s1 corporation), obtain a tax id, and have the tax id rather than a social security number for tax purposes. this, sometimes, can allow a physician to garner a lower tax rate as well as less likelihood of getting audited by the irs.

besides a potential savings on taxes, there are other business reasons that physicians choose to self incorporate. check out a site like www.bizfilings.org to learn more about it, and talk with your certified public accountant (cpa). self incorporation is not something that everyone does, but it's definitely something to think about.

Good advice (or at least i think so because I talked about it with my CPA).

 

[docB]

I'm pretty sure a resident with a family and now spouse income would pay close to zero taxes, based on our idiotic income tax scheme.

If you're getting an income it's going to get taxed. If you don't write a check on April 15 it just means you're doing your witholding wrong. And don't forget your social security taxes, medicare taxes, state taxes, property taxes and sales taxes.

 

[Blade28]

Yeah, damn government will always take a piece of anything we earn. 🙁

 

[mdjobexchange]

Physicians really get screwed on deductions these days. It really is not just docs, but anybody who is an employee making between 150k and 500k. As your income goes up, your deductions get phased out. Once you cross over about 200k, any deduction gets phased out or lowered.

Once you get over that, then you have the AMT (Alternative Minimum Tax) to deal with. Basically, the AMT was devised back in 1970 to catch about 20 people with high incomes who paid no taxes. The real kicker is that they did not index it to inflation, so what used to be a crazy high income back in 1970 of say, $275,000, is not so crazy high today. So, as the years have gone by, more and more people have, and will be caught by the AMT. Basically, the AMT disallows every deduction. You (or your accountants) have to figure 2 tax forms, one regular and one AMT. You end up paying whichever is higher.

We got bit by the AMT this year. We bought a Prius, it was supposed to get us a $3000 tax credit, not a deduction, but a credit. What happened? We crossed the line for the AMT and it was not allowed. Poof.....$3000 bucks just disappeared. Thanks MR. IRS.

Regarding the corporation deal, don't get fooled. Most docs end up having to form an S-Corporation, which is really just a professional corporation which helps to shield corporate assets from liability. This is business liability, such as sexual harassment, not medical malpractice. The tax savings for a doc with their own business set up as an S-corp are that you can deduct part of your self-employment tax and you can get more business deductions, this is becoming especially important with the AMT, as some of those deductions may not be allowed if you set the practice up as a Sole Proprietor. You will save some money on taxes, but if anybody tries to sell you a plan where you will pay zero tax, save $30 bucks to buy an orange prison jumpsuit. Doctors are suckers for tax scams.

There is some legislation to appeal or alter the AMT, but our country has spent itself into a huge hole and the AMT generates more and more money every year.

As a physician with a decent accountant, expect to pay about 25% of your overall income to the Feds. It is sickening to see the numbers, especially when it is going to fund "bridges to nowhere" in Alaska and line vice president Cheney's pockets.

 

[f_w]

Yet to understand the AMT. Last year, I had to pay, this year with a considerably higher income I don't (something to do with moving from a high income tax state to a low income tax state).

But yes, even physicians have to pay taxes. And no tax-scheme involving the purchase of windmills or shipping containers is going to change that.

 

[NotAProgDirector]

And no tax-scheme involving the purchase of windmills or shipping containers is going to change that.

Crap. Anyone want to buy some windmills?

 

[mdjobexchange]

From what I have read and heard from my accountants, living in a state with high income taxes is one of the biggest things which will kick you into the AMT. This is because if you live in California and make a salary of $200,000, you will pay around $15,000 in CA taxes. State taxes are a deduction on your federal tax form, so having this huge deduction on your federal taxes will probably qualify you for AMT. If you live in Nevada, Texas, or Florida and pay zero state taxes, it takes a much higher income to get embroiled with the AMT. I know people in CA who make about half of what I make and they have been paying AMT for three or four years.

The AMT is basically a separate, or alternate, tax form that you have to do along with your 1040. You end up paying the higher bill, which is usually the AMT. Here is a good link that explains it better than I do.

Disclaimer: I am not a licensed accountant, lawyer, astrologist, hypnotist, or windmill operator, so take this info at your own risk.

 

[f_w]

Crap. Anyone want to buy some windmills?

I would trade your windmills for a herd of 'beefalos'. Really sweet animals, in the past year they have only trampled two ranch-hands !

Tennessee oil wells anyone, oil wells...

 

[FaddyAcids]

how much taxes does a resident pay? i know it varies by state, is there a website that tells about every state? or can u give me examples?

 

[f_w]

how much taxes does a resident pay? i know it varies by state, is there a website that tells about every state? or can u give me examples?

http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp

Plug in your annual salary and change your 'pay frequency' to 'annual'. It will give you a good idea what you will pay.

As a single resident, your federal income tax is pretty low, once you have kids you pretty much fall below the poverty guidelines.

State income taxes vary. Some states don't have any (SD, TX, NV), some have a 'flat tax' of 5% or so. Others have a progressive tax that starts with 2% and tops out at 9% for the 'rich people' (-->income over 110k).

 

[FaddyAcids]

I assumed my salary is 40K, it gave me a 31K Net Pay!!!!!!!!!!!!!!!! I did something wrong right?

 

[yaah]

There are federal taxes as well. Medicare taxes, etc. Quantum mechanics is easier to understand and decipher than the tax system in this country. In brief: There are lots of things that are taxed and you can't get out of most of it unless you make your income illegally or in a hedge fund.

I suspect you need to acquaint yourself with our tax laws. http://en.wikipedia.org/wiki/Taxes

The Government sure do take a bite, don't she? - Payroll Lady, Raising Arizona