Tax Deductions

A Cash Balance Contribution May Help you Qualify for the New Deduction for “Qualified Business Income”

Recall from the last two Newsletters that the new tax law disallows doctors and other professionals from claiming the QBI deduction unless their taxable income is at or below $315,000 for married couples and $157,500 for singles. If taxable income is over $415,000/$207,500, then the deduction is disallowed entirely. If income is within these ranges, […]

The Long-Term Impact of Underpaying Your Young Children to Work in Your Practice

The dentist’s accountant was nervous that he was paying his young children $5,500 per year to work in the practice using the children’s images for marketing purposes.  He said he’d be comfortable with the children earning only $1,500 until they reach ten years old.  Consider the long-term wealth reduction if the dentist adopts this conservative […]

After Tax Reform, It Still Makes Sense to Make Back Door Roth IRA Contributions

Aside from disallowing Roth IRA “recharacterizations” (undoing a Roth IRA conversion if the investment value falls), the tax law changes left traditional and Roth IRAs alone.  If anything, the idea of making a non-deductible contribution to a traditional IRA and promptly converting it to a Roth IRA makes more sense after tax reform than it […]

Charitable Remainder Trusts and Other Exotic Ways to Give to Charities While Retaining Income From the Donated Property

In the right setting, these “planned giving” ideas are great.  The concept is that you can get an up-front charitable deduction, collect investment income, reduce estate taxes and, if you donate appreciated property, avoid capital gain taxes — while helping your school or some other charitable institution you are fond of.  But in my opinion, […]

TAX CUTS AND JOBS ACT OF 2017 – PART 3

This Newsletter continues the discussion of Tax Reform’s changes to businesses and will primarily cover the phenomenal new depreciation rules.  Perhaps the single biggest change in the entire Tax Cuts and Jobs Act is the move to 100% first-year depreciation for most business assets.  But, this isn’t all.  The new law makes major changes to […]

TAX CUTS AND JOBS ACT OF 2017 – PART 2

General:  The new tax law changes affecting corporations are the most dramatic.  The reduction in the corporate tax rate from 35% to 21% will be a boon for the economy, making the United States, from a tax standpoint, more competitive with the rest of the developed world.  Corporations, which since the 2008 financial crisis have […]

TAX CUTS AND JOBS ACT OF 2017 – PART 1

The tax reform that cleared Congress and is awaiting President Trump’s signature is the biggest overhaul in the tax laws since the Tax Reform Act of 1986.  This is a massive and complex series of new laws – not just in the magnitude of the cuts, but because it fundamentally alters many principles we’ve been […]

TAX CUTS AND JOBS ACT OF 2017 – PART I

The tax reform that cleared Congress and is awaiting President Trump’s signature is the biggest overhaul in the tax laws since the Tax Reform Act of 1986.  This is a massive and complex series of new laws – not just in the magnitude of the cuts, but because it fundamentally alters many principles we’ve been […]

Final Year-End Tax-Saving Strategies

The Senate Passes its Version of a Tax Reform Bill, So When (If) President Trump Signs a Final Version, Expect Individual and Business Tax Rates to Fall Modestly in 2018:  We will devote at least one full issue of the Newsletter to the final law once it passes.  In the meantime, over the last two […]

Charitable Giving Through Donor Advised Funds

Creating a Donor Advised Fund for Charitable Giving is an Intriguing Concept, but be Prepared for High Fees and Limited Investment Options:   Financial advisors are urging their doctor clients to set up donor advised funds before year-end.  The idea is that you will open a charitable account through a broker like Charles Schwab, Fidelity or […]