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Tax planning for the dentist in an era of uncertainty

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  • 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 2013Taxable Income 275,000 275,000Sch. A Taxes 13,000 13,000Other not included deductions 5,000 5,000AMT I 293,000 293,000AMT Exemption <75,000> <45,000>AMT (Rate 28%) 61,040 69,440Regular 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 HouseholdRate Single Filers Married Joint Filers Filers10% $0 to $8,950 $0 to $17,900 $0 to $12,75015% $8,950 to $36,250 $17,900 to $72,500 $12,750 to $48,60025% $36,250 to $87,850 $72,500 to $146,400 $48,600 to $125,45028% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,15033% $183,250 to $398,350 $223,050 to $398,350 $203,150 to $398,35035% $398,350+ $398,350+ $398,350+
  • 14. Expected 2013 Brackets Head of HouseholdRate Single Filers Married Joint Filers Filers15% $0 to $36,250 $0 to $60,550 $0 to $48,60028% $36,250 to $87,850 $60,550 to $146,400 $48,600 to $125,45031% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,15036% $183,250 to $398,350 $223,050 to $398,350 $203,150 to $398,35039.6% $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 TaxTP Wages 225,000SP Wages 55,000SP Sch. C 20,000TP LLC 25,000Total 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 IncomeIncludes Not Included•Interest •Tax exempt interest•Dividends •Payout from retirement•Cap Gains plans (401k, IRAs, Roths, Profit sharing defined•Annuities benefits plans•Royalties•Passiverental income
  • 19. Medicare SurtaxWages 210,000Interest 2,000Dividends 8,000 $80,000 NIICap Gains 70,000AGI 290,000 → $40,000 over MAGI thresholdLower of:3.8% x 80,000 = $3,0403.8% 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, PartnerGoldin Peiser & Peiser, LLP ACutler@GPPcpa.com 214-635-2541 www.GPPcpa.com Dental.GPPcpa.com