Given these sobering facts, the purpose of this article is to show you four ways to potentially save and possibly motivate you to investigate these planning concepts now, before the end of the year. Let’s examine them now:
Monday, April 15, 2013
Don't Let Another April 15th Be Rainy for You:
Four Tax-Saving Ideas You Can Do Now!
By David B. Mandell JD, MBA and Carole Foos CPA of OJM GROUP.
As a physician, do you realize that, after the new tax increases for 2013 -- between income, capital gains, Medicare, self-employment and other taxes -- you likely spend between 45 to 55% of your working hours laboring for the IRS and your state? That is a lot of time with patients for someone else’s benefit. Given this, shouldn’t your advisors be giving you creative ways to legally reduce your tax liabilities? How many tax-reducing ideas does your CPA regularly provide you? If you are like most physicians, you get very few tax planning ideas from your advisors.
Given these sobering facts, the purpose of this article is to show you four ways to potentially save and possibly motivate you to investigate these planning concepts now, before the end of the year. Let’s examine them now:
Given these sobering facts, the purpose of this article is to show you four ways to potentially save and possibly motivate you to investigate these planning concepts now, before the end of the year. Let’s examine them now:
Wednesday, March 6, 2013
Is Your Advisor Working for You?
Important questions might give you the answer. Part II
By David B. Mandell JD, MBA and Andrew Taylor CFP® of OJM GROUP.
As financial advisors to hundreds of physicians throughout the U.S. and lecturers to thousands more, we have seen a sharp increase in the last few years of questions about how investment firms, including ours, make money from their clients. Physicians are not alone, as a 2011 survey by Cerulli Associates and Phoenix Marketing International found that nearly 2 out of every 3 investors in the survey were confused about how they were paying their advisors.
This issue made headlines again in 2012, as a high ranking Goldman Sachs employee resigned publicly through an Op-Ed piece in the New York Times, citing corporate culture as the primary reason for his departure. The employee stated "the interests of the clients continue to be sidelined in the way the firm operates and thinks about making money." If this occurs at Goldman Sachs, whose clients include the most sophisticated financial firms in the world, it can certainly also occur at any physician's chosen investment firm.
If you missed Part I, view it here.
This issue made headlines again in 2012, as a high ranking Goldman Sachs employee resigned publicly through an Op-Ed piece in the New York Times, citing corporate culture as the primary reason for his departure. The employee stated "the interests of the clients continue to be sidelined in the way the firm operates and thinks about making money." If this occurs at Goldman Sachs, whose clients include the most sophisticated financial firms in the world, it can certainly also occur at any physician's chosen investment firm.
Thursday, February 7, 2013
Is Your Advisor Working For You?
Important questions might give you the answer. Part I
By David B. Mandell JD, MBA and Andrew Taylor CFP® of OJM GROUP.
As financial advisors to hundreds of physicians throughout the U.S. and lecturers to thousands more, we have seen a sharp increase in the last few years of questions about how investment firms, including ours, make money from their clients. Physicians are not alone, as a 2011 survey by Cerulli Associates and Phoenix Marketing International found that nearly 2 out of every 3 investors in the survey were confused about how they were paying their advisors.
This issue made headlines in 2012, as a high ranking Goldman Sachs employee resigned publicly through an Op-Ed piece in the New York Times, citing corporate culture as the primary reason for his departure. The employee stated "the interests of the clients continue to be sidelined in the way the firm operates and thinks about making money." If this occurs at Goldman Sachs, whose clients include the most sophisticated financial firms in the world, it can certainly also occur at any physician's chosen investment firm.
This issue made headlines in 2012, as a high ranking Goldman Sachs employee resigned publicly through an Op-Ed piece in the New York Times, citing corporate culture as the primary reason for his departure. The employee stated "the interests of the clients continue to be sidelined in the way the firm operates and thinks about making money." If this occurs at Goldman Sachs, whose clients include the most sophisticated financial firms in the world, it can certainly also occur at any physician's chosen investment firm.
Thursday, January 24, 2013
The Fiscal Cliff Tax Deal: The Good, Bad & Ugly For High Income Clients
By Carole C. Foos CPA and David B. Mandell JD MBA of OJM GROUP.
On January 2, 2013, President Obama signed the Taxpayer Relief Act of 2012 (the Act). The so-called "Relief" Act permanently extends certain tax cuts, but for high-income taxpayers like physicians, the Act increases taxes dramatically in some cases. While there is much bad news below, the good news is that many of the techniques we normally employ to help physicians reduce taxes are still here and more valuable than ever.If you recall "The Good, the Bad, and the Ugly," we will actually get the Ugly out of the way, move on to the Bad, and finish with the Good. Highlights of the Act include:
INCOME TAXES: The Ugly
Important Take-Away: Many of us now face a 50%-plus marginal income tax regime, when all of the new taxes below are accounted for. Depending on the city/state where you live, tax rates are now no less than 45-55%. Income tax planning has not been as important in 30 years.
- Reinstatement of 39.6% Rate - The Act permanently reinstates the previous highest income tax rate of 39.6% for taxpayers with "taxable income" over $400,000 for single filers and $450,000 for married joint filers (the "39.6% thresholds"). The 39.6% thresholds (as well as the other income thresholds for the lower brackets) are subject to annual inflation adjustments after 2013.
Practical Note: Generally, "taxable income" is adjusted gross income (AGI) reduced by allowances for personal exemptions and itemized deductions. These allowances will have substantially less impact for high-income taxpayers, however, due to the reinstatement of the itemized deduction limitations and personal exemption phase-outs, as discussed below.
Wednesday, November 28, 2012
Fringe Benefit Plans; Valuable Planning Tools You Haven't Heard of.
By Carole C. Foos CPA of OJM GROUP.
As authors of two books on financial planning specifically for physicians, we have had the opportunity to speak with hundreds, if not thousands, of doctors of various ages over the past decade. What we have seen is that two doctors of the same specialty with similar incomes can have very different income levels in retirement. Why? Three reasons physicians may have very different qualities of life in retirement are:
1. Devastating Incident (lost lawsuit or divorce)
2. Poor investments
3. Lack of attention to taxes
As authors of two books on financial planning specifically for physicians, we have had the opportunity to speak with hundreds, if not thousands, of doctors of various ages over the past decade. What we have seen is that two doctors of the same specialty with similar incomes can have very different income levels in retirement. Why? Three reasons physicians may have very different qualities of life in retirement are:
1. Devastating Incident (lost lawsuit or divorce)
2. Poor investments
3. Lack of attention to taxes
A Common Tax Mistake Could Be Costing You Thousands Annually
Are you an owner of a medical practice taxed as a flow-through entity… such as an S-corporation? Most physicians are – in working with over 1,000 doctors, we would estimate that 70% of medical practices operate as S corporations. As such, you may be paid both as an employee of the practice – receiving a w-2 – and as an owner of the practice –through a K-1 distribution. The key difference between income earned as employee compensation (W-2) and that earned as a K-1 profit distribution is that you pay FICA (Medicare and Social Security) tax on the income earned as an employee but not necessarily on K-1 profit distributions. While the large Social Security portion of FICA phases out after income of $110,100 in 2012, the 2.9% Medicare tax has no phase-out. Also, it is scheduled to increase to 3.8% in 2013 under The Patient Protection and Affordable Care Act signed into law in March 2010.
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