The document summarizes upcoming tax changes that may impact dentists, including increases to payroll taxes, reductions to depreciation deductions and AMT exemptions, new excise taxes on medical devices, and changes to tax brackets, capital gains rates, and deductions for medical expenses. It recommends tax planning strategies for dentists such as deferring income and expenses between years, accelerating capital gains, and evaluating retirement plans to minimize taxes and navigate future uncertainty around tax laws.

1. Tax Planning for the Dentist
in an Era of Uncertainty
Presented by Erick Cutler, CPA
Friday, November 30, 2012

2. Current Tax Planning
• No surprises
• Use of retirement accounts
• Depreciation deductions
• Wages & withholding

3. Alternative Minimum Tax
• Pay higher of Regular or AMT
• 2011 AMT exemption $74,450
• 2012 AMT exemption $45,000

4. AMT Calculation
Current 2013
Taxable Income 275,000 275,000
Sch. A Taxes 13,000 13,000
Other not included deductions 5,000 5,000
AMT I 293,000 293,000
AMT Exemption <75,000> <45,000>
AMT (Rate 28%) 61,040 69,440
Regular Tax 55,000 55,000

5. Anticipated Changes

6. Payroll Tax Holiday
• Rate to increase (4.2% to 6.2%) on first
$110,000 of employee wages

7. Depreciation
• § 179 Expense Election
– 2012 Expense $139,000 (2013 $25,000)
– 2012 Investment ceiling $560,000 (2013
$200,000)
• Bonus Depreciation (gone after 2012)

8. Excise Tax on Medical
Devices
• 2.3% tax on sale of medical devices
• Tax is paid by manufacturer
• Not on items purchased by general
public i.e. eyeglasses, contact, hearing
aids, etc.

9. Capital Gains
• Long term rates (15% to 18%)
– Additional 3.8% could apply
• Qualified Dividends

10. Marriage Penalty
• Standard deduction to decrease
• $11,900 for 2012
• $10,150 for 2013

11. Medical Expense
Deductions
• 2012 limit is 7.5% of AGI
• 2013 limit is 10% of AGI

12. Tax Brackets

13. 2012 Brackets
Head of Household
Rate Single Filers Married Joint Filers
Filers
10% $0 to $8,950 $0 to $17,900 $0 to $12,750
15% $8,950 to $36,250 $17,900 to $72,500 $12,750 to $48,600
25% $36,250 to $87,850 $72,500 to $146,400 $48,600 to $125,450
28% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,150
33% $183,250 to $398,350 $223,050 to $398,350 $203,150 to $398,350
35% $398,350+ $398,350+ $398,350+

14. Expected 2013 Brackets
Head of Household
Rate Single Filers Married Joint Filers
Filers
15% $0 to $36,250 $0 to $60,550 $0 to $48,600
28% $36,250 to $87,850 $60,550 to $146,400 $48,600 to $125,450
31% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,150
36% $183,250 to $398,350 $223,050 to $398,350 $203,150 to $398,350
39.6% $398,350+ $398,350+ $398,350+

15. Hospital Insurance Tax (HI)
• Applies to wages received with respect
to employment in excess of $250,000
($125,000 MFJ & $200,000 single HOH)
• Rate is .9% on amount in excess of above
figures
• Also applies to self-employment income

16. Hospital Insurance Tax
TP Wages 225,000
SP Wages 55,000
SP Sch. C 20,000
TP LLC 25,000
Total Wage and SE income $325,000 → $75,000 over threshold
$75,000 x .9% = $675 additional tax

17. Medicare Surtax
• Imposed on the lower of the filers net
investment income or the excess of
MAGI over thresholds ($250,000
MFJ, $125,000 MFS, $200,000 single or
HOH)
• Rate is 3.8%

18. Medicare Surtax
Investment Income
Includes Not Included
•Interest •Tax exempt interest
•Dividends •Payout from retirement
•Cap Gains plans (401k, IRAs, Roths,
Profit sharing defined
•Annuities
benefits plans
•Royalties
•Passive
rental income

19. Medicare Surtax
Wages 210,000
Interest 2,000
Dividends 8,000 $80,000 NII
Cap Gains 70,000
AGI 290,000 → $40,000 over MAGI threshold
Lower of:
3.8% x 80,000 = $3,040
3.8% x 40,000 = $1,520

20. Tax Planning Strategies
• Manage your taxable income for 2012
• Defer tax deductible expenses to 2013
• Consider acceleration of capital gains
• Business owners:
– Consider pushing deductions to
2013(employee bonuses)
– Defer purchase of depreciable assets

21. Tax Planning Strategies
• Defer net operating losses to 2013
• Consider restructuring investment
portfolios to manage future Net
Investment Income to avoid additional
Medicare tax
• Retirement plans (implementation &
evaluation of existing plans)

22. Tax Planning in an
Era of Uncertainty
• Current year tax planning
• Awareness of changes and the economic
environment
• Broadened planning perspective

23. For Additional Information
Contact
Erick Cutler, Partner
Goldin Peiser & Peiser, LLP
ACutler@GPPcpa.com
214-635-2541
www.GPPcpa.com
Dental.GPPcpa.com