Them Tax Brackets

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F0nzie said:
Ah I was wondering if having an LLC for your rental would shield it from your personal assets in the event of a malpractice suit.
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Ah, that'd be more of a problem if/when I start practicing out of the VA. We are somewhat shielded at the moment.
 
WalterDonnie said:
Can anyone confirm that the amount forgiven by pslf is taxed as if it were income?
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As nexus mentioned, PSLF isn't currently taxed as income. At present, that only occurs for non-PSLF-forgiven balances (i.e., after 20 or 25 years, whichever it is at this point).
 
WisNeuro said:
Try and lower your taxable income any way you can. Max out your 401k (if you have one), if you are self-employed, look at the SEP options, contribute to a FSA/HSA if it makes sense for you/r family, and start itemizing every deduction you possibly qualify for (mortgage, student loan interest, charitable contributions, unreimbursed job expenses, etc) to get over and above the standard deduction. Having a rental property has also been huge for me. Especially since it's near family, so I bookend a trip back to do some maintenance with some family time to write off a good chunk of the travel expenses.

In general, get a good accountant who knows the lay of the land, or get fairly acquainted with tax law as it applies to you.
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Also recognize that you can't write off the loss from the rental property after you get to certain income. You can still use expenses to negate the income from rent but can't deduct negative cash flow. With maintenance, travel expenses, and depreciation we were able to claim a pretty good loss until I started this new job where I am hitting those numbers where it just goes away. Its kind of a weird situation to be at the lowest rung of the upper tax brackets.
 
smalltownpsych said:
Also recognize that you can't write off the loss from the rental property after you get to certain income. You can still use expenses to negate the income from rent but can't deduct negative cash flow. With maintenance, travel expenses, and depreciation we were able to claim a pretty good loss until I started this new job where I am hitting those numbers where it just goes away. Its kind of a weird situation to be at the lowest rung of the upper tax brackets.
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True, but you can get the income from that rental down to untaxed with some maneuvering. Plus, I try to keep my taxable income as low as possible (max out 401k, other deductions).
 
WisNeuro said:
True, but you can get the income from that rental down to untaxed with some maneuvering. Plus, I try to keep my taxable income as low as possible (max out 401k, other deductions).
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I could bump up my 401k more, but then my finance guy was saying that there are some advantages to using a Roth IRA because you pay the tax now as opposed to when you retire and start withdrawing the interest. Also, this is the first place I have ever been where there is no match. I am also using a health savings account and am a bit confused about how to use that most effectively.
 
smalltownpsych said:
I could bump up my 401k more, but then my finance guy was saying that there are some advantages to using a Roth IRA because you pay the tax now as opposed to when you retire and start withdrawing the interest. Also, this is the first place I have ever been where there is no match. I am also using a health savings account and am a bit confused about how to use that most effectively.
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The HSA is actually probably the best retirement savings vehicle for you, since you don't get a match. As for how to use it, WCI explains it better than I can:
http://www.hcplive.com/physicians-m...The-Best-Ways-to-Use-a-Health-Savings-Account
The short answer is that if you're under 65, you should make your health care purchases out of pocket, save the receipts, and let the tax-free HSA compound. Then withdraw the HSA money in retirement after that money has grown as much as possible.

Roth IRAs usually have much better investment choices than an employer 401k, but most people on this forum expect to have a higher marginal tax rate now than in retirement (which would favor maxing out the 401k).

ETA - does your "finance guy" manage your Roth IRA? If so, does he get paid based on the size of your retirement nest egg he manages (AUM)?
 
smalltownpsych said:
I could bump up my 401k more, but then my finance guy was saying that there are some advantages to using a Roth IRA because you pay the tax now as opposed to when you retire and start withdrawing the interest. Also, this is the first place I have ever been where there is no match. I am also using a health savings account and am a bit confused about how to use that most effectively.
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A Roth is using after tax dollars, so it will not lower your taxable income. Also, there is a phase out limit on income under which you can no longer contribute to a Roth. One thing you can do is a Roth conversion, but that is something to take up with your tax guy, because there are times when it makes more sense than others due to tax implications.
 
F0nzie said:
Nice
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Yeah, one of the benefits of the FTCA. People generally have to sue the government, they can't sue us directly. I think there are some exceptions, but they involve more direct harm types of issues. As a consult service who sees patients 1-2 times, not as much of a concern. I more get patients displeased because I said their cognitive profile was un-interpretable for validity concerns, and it doesn't look all that great for that SC claim they have coming up.
 
cookymonster said:
The HSA is actually probably the best retirement savings vehicle for you, since you don't get a match. As for how to use it, WCI explains it better than I can:
http://www.hcplive.com/physicians-m...The-Best-Ways-to-Use-a-Health-Savings-Account
The short answer is that if you're under 65, you should make your health care purchases out of pocket, save the receipts, and let the tax-free HSA compound. Then withdraw the HSA money in retirement after that money has grown as much as possible.

Roth IRAs usually have much better investment choices than an employer 401k, but most people on this forum expect to have a higher marginal tax rate now than in retirement (which would favor maxing out the 401k).

ETA - does your "finance guy" manage your Roth IRA? If so, does he get paid based on the size of your retirement nest egg he manages (AUM)?
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This got me intrigued about health savings accounts as I don't know anything about them. From quick reading seems you have to get them from an employer or have "high deductible" insurance to qualify for one as an individual. What source are most physicians getting theirs from?
 
Armadillos said:
This got me intrigued about health savings accounts as I don't know anything about them. From quick reading seems you have to get them from an employer or have "high deductible" insurance to qualify for one as an individual. What source are most physicians getting theirs from?
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Also, if you do have one, make sure you check all of the program rules before going whole hog. Some employers operate HSA's under a use it or lose it policy for the year.
 
One other thing you can do is make sure that you attend educational conferences for CME. The ancillary psychiatric benefits to the physician of going to lectures in Florida in the winter cannot be overstated.


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keifernny2 said:
One other thing you can do is make sure that you attend educational conferences for CME. The ancillary psychiatric benefits to the physician of going to lectures in Florida in the winter cannot be overstated.


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I'm headed to Cape Cod for the second summer in a row. I'll be spending a nice big chunk of non-taxed educational expenses. The only thing I'll pay for is my wife's airfare. So when I am in a private practice down the road, I will be able to write off travelling as an expense so long as I attend a conference?
 
smalltownpsych said:
I'm headed to Cape Cod for the second summer in a row. I'll be spending a nice big chunk of non-taxed educational expenses. The only thing I'll pay for is my wife's airfare. So when I am in a private practice down the road, I will be able to write off travelling as an expense so long as I attend a conference?
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well, the business purpose of the travel needs to be to attend the conference/CME, not *just* for traveling. You are allowed to take side trips, but they're not deductible.
 
I see a bunch of jobs recently which are 300+k/yr and in one case, 7 weeks PTO. The job market is really picking up for Psych compared to 5 years ago or more. Problem now will be the tax burden for W2.
 
I like White Coat Investor, and I realize people mean well, but I always get a bit bemused by people suggesting means of lowering your tax burden by spending money, or putting it in accounts you can't touch until retirement, by doing things like donating to charity, saving for your kids' college, opening an HSA, etc. Here's the thing: the primary reason most of us want to decrease our taxes isn't a desire to stick it to the feddle gubmint (though that is often a nice bonus.) The primary reason is that we want more money in our pocket. Donating money to charity, or maxing out my IRA contributions, or whatever, are great, but they don't result in me having more cash to use as a down payment on a house, buy a new car, go out to dinner, take a nice trip, etc. (I realize retirement contributions mean more money in my pocket 30 years from now, but the main point still stands.) If I put $6250 into an HSA, great, that's $6250 less I have to pay federal income taxes on--but I'm still out $6250.
 
Trismegistus4 said:
I like White Coat Investor, and I realize people mean well, but I always get a bit bemused by people suggesting means of lowering your tax burden by spending money, or putting it in accounts you can't touch until retirement, by doing things like donating to charity, saving for your kids' college, opening an HSA, etc. Here's the thing: the primary reason most of us want to decrease our taxes isn't a desire to stick it to the feddle gubmint (though that is often a nice bonus.) The primary reason is that we want more money in our pocket. Donating money to charity, or maxing out my IRA contributions, or whatever, are great, but they don't result in me having more cash to use as a down payment on a house, buy a new car, go out to dinner, take a nice trip, etc. (I realize retirement contributions mean more money in my pocket 30 years from now, but the main point still stands.) If I put $6250 into an HSA, great, that's $6250 less I have to pay federal income taxes on--but I'm still out $6250.
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I see where you're coming from, but here are a few points I'd make:
- if you decide to not take that $6250 in an HSA, in an average state 40% of income goes to the federal and state government. So you can either put $6250 in an HSA or be out more like $2500 (it's only worth about $375o after that huge haircut).
- most physicians who have zero money in an HSA or Roth IRA at 65 are going to regret it.
- a progressive tax system by definition is antithetical to paying lower taxes AND taking home more money. You can't have both, and IMO the first principle trumps the second.
 
Doctor Bagel said:
That would be huge. Based on my very rough calculations, I think I'm at about 40% tax rate (high state income tax state although I also don't pay sales tax and we have pretty low fees for most government services -- so less regressive tax scheme). And if you're doing income based repayment of any sort, income increases increase your monthly payments. I'd be happy if I could just write off any of that interest I pay on loans. And why as an employed person am I limited to $18k to put into my 401k?
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So you're either in Delaware, Montana, or Oregon--is that right? What are the tort reform laws like in those states? How much is your malpractice insurance?
 
I just did my taxes and got penalized over $600 for being without insurance for three months. My current job delayed my start date because credentialing took forever. I asked if they'd cover insurance starting on the contract start date. They said no. Then when I did start, I never received the mid year enrollment form. When I asked about it, they're like "we sent it! You missed the deadline. You were enrolled in nothing!" So I had to wait in Jan 1. And now I'm fined.

Sigh. I guess the penalty is cheaper than COBRA or premiums through the marketplace. But still.


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sunlioness said:
I just did my taxes and got penalized over $600 for being without insurance for three months. My current job delayed my start date because credentialing took forever. I asked if they'd cover insurance starting on the contract start date. They said no. Then when I did start, I never received the mid year enrollment form. When I asked about it, they're like "we sent it! You missed the deadline. You were enrolled in nothing!" So I had to wait in Jan 1. And now I'm fined.

Sigh. I guess the penalty is cheaper than COBRA or premiums through the marketplace. But still.


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Wow, sorry to hear about that! That blows :/
 
Silent Cool said:
So you're either in Delaware, Montana, or Oregon--is that right? What are the tort reform laws like in those states? How much is your malpractice insurance?
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Don't know about tort reform laws here, but malpractice insurance is pretty cheap for psych. Certainly not on the higher end for insurance.
 
sunlioness said:
I just did my taxes and got penalized over $600 for being without insurance for three months. My current job delayed my start date because credentialing took forever. I asked if they'd cover insurance starting on the contract start date. They said no. Then when I did start, I never received the mid year enrollment form. When I asked about it, they're like "we sent it! You missed the deadline. You were enrolled in nothing!" So I had to wait in Jan 1. And now I'm fined.

Sigh. I guess the penalty is cheaper than COBRA or premiums through the marketplace. But still.


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Ridiculous. I guess that's even more reason to move on.
 
cookymonster said:
I see where you're coming from, but here are a few points I'd make:
- if you decide to not take that $6250 in an HSA, in an average state 40% of income goes to the federal and state government. So you can either put $6250 in an HSA or be out more like $2500 (it's only worth about $375o after that huge haircut).
- most physicians who have zero money in an HSA or Roth IRA at 65 are going to regret it.
- a progressive tax system by definition is antithetical to paying lower taxes AND taking home more money. You can't have both, and IMO the first principle trumps the second.
Click to expand...
I agree about retirement accounts and HSAs, in that you're better off funding them than not, but as to your last point, why? What's the point of paying lower taxes if you don't get the money?
 
You do "get the money," and you get a lot more of it - you just have to wait until you're 60-65 to use it. It's up to you whether it's worth delaying that gratification.

I'd rather pay lower taxes than take home more money because time is just as valuable as money to me. Also, I think of compensation not only as what my hospital pays me, but also a combination of what the government forces me to pay them. So the more I work, the lower I'm compensated for my time, since I receive the same amount of money but have to pay more of it back. It's hard for me to think of too many things I don't already spend money on now that I would work longer hours in order to afford, especially when the incremental take-home pay decreases every additional hour I work.

I'd rather take less money home and enjoy my time than settle for a lower compensation.
 
Trismegistus4 said:
I like White Coat Investor, and I realize people mean well, but I always get a bit bemused by people suggesting means of lowering your tax burden by spending money, or putting it in accounts you can't touch until retirement, by doing things like donating to charity, saving for your kids' college, opening an HSA, etc. Here's the thing: the primary reason most of us want to decrease our taxes isn't a desire to stick it to the feddle gubmint (though that is often a nice bonus.) The primary reason is that we want more money in our pocket. Donating money to charity, or maxing out my IRA contributions, or whatever, are great, but they don't result in me having more cash to use as a down payment on a house, buy a new car, go out to dinner, take a nice trip, etc. (I realize retirement contributions mean more money in my pocket 30 years from now, but the main point still stands.) If I put $6250 into an HSA, great, that's $6250 less I have to pay federal income taxes on--but I'm still out $6250.
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True, but if you're the kind of person that wants to make charitable contributions and would do so anyway, it's a nice incentive. I agree, though, that doing those things is silly as it's a bit of a self-defeating exercise if your only goal is to reduce your taxable income.
 
Doctor Bagel said:
Where I got screwed (and I'm not alone with this) is all the interest that accrued during medical school and residency. It's so depressing.
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Me too. I was under the impression that interest does not accrue on federal subsidized loans during IBR. Yet somehow my loan balance is much higher than it was upon med school graduation. I'd have to dig through all the records to find out why this is, but it was very disappointing.

FlowRate said:
But you're rich and there are a lot of voters who think you should be paying more taxes.
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Yes. I know there are plenty of left-leaning people in here and I'm not going to change anyone's mind overnight, but you need to realize that when Bernie Sanders points his finger at the "one percent," he's talking about you.

cookymonster said:
You do "get the money," and you get a lot more of it - you just have to wait until you're 60-65 to use it. It's up to you whether it's worth delaying that gratification.

I'd rather pay lower taxes than take home more money because time is just as valuable as money to me. Also, I think of compensation not only as what my hospital pays me, but also a combination of what the government forces me to pay them. So the more I work, the lower I'm compensated for my time, since I receive the same amount of money but have to pay more of it back. It's hard for me to think of too many things I don't already spend money on now that I would work longer hours in order to afford, especially when the incremental take-home pay decreases every additional hour I work.

I'd rather take less money home and enjoy my time than settle for a lower compensation.
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No, you "get the money" only if we're talking about retirement accounts and HSAs. For other frequently cited means of lowering your taxable income, like donating to charity, you don't.

I agree with you about wanting to enjoy your spare time. I'm just saying that whenever the subject of lowering one's tax burden comes up, people start throwing out these suggestions like "donate to charity," "have children," "buy a second home," etc., which obviously have implications beyond just lowering your tax burden, and don't result in more money in your pocket/more spare time to enjoy.
 
Sure we have loans, but it is a really bad look for people with expected earning potentials in 180-300k range to be complaining about money.

Maybe if you live in NYC or the Bay Area you make be stuck being middle class but everywhere else your doing extremely well

All of our friends have college degrees and parents all have graduate degrees.
We have what is equivalent to a 2 resident salary now and among our friend group we already have the highest household income, we are getting in range of our parents and thats all with the expectation of my salary to triple to quintuple in a couple years before the age of 30.

Medicine may not be the absolute gold mine it was, but it's still an incrediblely good gig.
 
SomeDoc said:
An old article, with a few updates, but still a good read.

A Novel Look at Physician Income
http://www.er-doctor.com/doctor_income.html
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Articles like this always make me laugh, they always do everything in their power to favor the other profession over medicine, you have to be delusional to buy into this stuff. I should write one about medicine vs starting a lemonade stand on the golf course at age 9. (Then will of course also account for, how much more lemonade you would sell if working doctor hours)
 
There are many jobs that require less time, delayed gratification, mental reserves, and financial investment than pursuing a career in medicine.

Medicine is still a good gig, yes, but the point is you don't have to have a graduate or professional degree to accumulate a high net worth. The majority of high accumulators of wealth are not doctors or lawyers, but individuals who are careful with their finances, save prodigiously, and maximize unrealized gains and tax advantages.
 
SomeDoc said:
Medicine is still a good gig, yes, but the point is you don't have to have a graduate or professional degree to accumulate a high net worth. The majority of high accumulators of wealth are not doctors or lawyers, but individuals who are careful with their finances, save prodigiously, and maximize unrealized gains and tax advantages.
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Very true.

My high school best friend became an engineer and started at $100,000. With med school/residency/fellowship, he destroyed my income for 9 years.
 
TexasPhysician said:
Very true.

My high school best friend became an engineer and started at $100,000. With med school/residency/fellowship, he destroyed my income for 9 years.
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I'm an engineer as well. The 100k engineering job out of undergrad can happen and I knew a couple people who got one, but is certainly not typical. It's many standard deviations away from the mean entry level engineering salary. A lot of engineers will be lucky to hit 100k anytime in their career
 
Armadillos said:
I'm an engineer as well. The 100k engineering job out of undergrad can happen and I knew a couple people who got one, but is certainly not typical. It's many standard deviations away from the mean entry level engineering salary. A lot of engineers will be lucky to hit 100k anytime in their career
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I'm sure that is true, but my buddy was topping 140k pre-30 years old. If you are good, people will pay.
 
FlowRate said:
But you're rich and there are a lot of voters who think you should be paying more taxes. This is a great case study in the economic truism that the marginal value of your time spent working decreases as your tax rate increases and you're now less likely to work more (and therefore help ease the physician shortage). It's also a great example of why (as we all know) physician salaries are completely misleading -- much higher tax rate even though you deferred any real income for 8+ years.

Also, is it not crazy to anyone else that getting married is worse for your taxes if your partner makes the same amount of money that you do?
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How so?

Edit: nvm figured out you meant single vs married filing jointly not filing separately vs jointly.
 
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