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NOTICE TO RESIDENTS OF MARYLAND

We are NOT affiliated with the State of Maryland. If you are looking for information about Maryland income taxes, please go to www.marylandtaxes.com.


Useful Links:

FindAGoodCPA.com - Not a healthcare professional?  Find a CPA or EA who understands the tax issues specific to you.

Nanny Taxes - Find out what's involved with complying with the Nanny Tax Rules

IRS Web Site - for tax forms, publications, and general tax information.

Exchange Authority - New England's first authority for IRC 1031 Exchanges

Cost Segregation Studies - Accelerate tax depreciation deductions on new and existing buildings through cost segregation studies

Social Security - find out the latest rules or your projected retirement benefit.

The Company Corporation offers fast, reliable & affordable incorporation and LLC services.


MONTHLY TAX NEWSLETTER

February 2014

TAX GUIDE FOR PHYSICIANS WORKING AS INDEPENDENT CONTRACTORS

by Andrew D. Schwartz, CPA

Our friends at Barton Associates, the Locum Tenens Experts, wanted to compile a tax guide to provide their contractors with a summary of the basic tax rules affecting them. Founded in 2001, Barton Associates is a leading locum tenens staffing company serving physicians, nurse practitioners, and hospitals, medical practices and companies throughout the United States.

Back in the fall, Barton Associates reached out to us through our MDTAXES website to see if they could use information posted in some of our articles over the years as a foundation for their guide.  Well, to be completely honest, the team at Barton Associates put together a terrific eight page tax guide for self-employed healthcare professionals that covers the following topics:

  • Deductions

  • Retirement Accounts

  • Health Savings Accounts

  • Estimated Quarterly Taxes

  • Planning

I strongly recommend that any healthcare professional who earns income as an independent contractor take the time to download and read this tax guide.  The information is well written and very easy to understand.

Below are links to access Barton Associates' Tax Guide:

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8 RESPLENDENT RESOLUTIONS REDUX

by Andrew D. Schwartz, CPA

Last month, we posted an article about Eight REsplendent REsolutions To Improve Your Personal Finances.  Boston area radio personality George Knight read this article and thought it would make a timely and informative interview to share with his listeners.

Here are the 8 resolutions recommended in that article:

  • REset your retirement savings.

  • REfinance your home mortgage. 

  • REduce your personal debt.

  • REvise your savings and debt reduction goals.

  • REbalance your investment portfolio.

  • REcalculate how much your retirement savings will be worth when you retire.

  • REvisit your life and disability insurance needs.

  • REsolve errors on your credit report.

We're pleased to announce that you can download this informative 13.5 minute radio interview:

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SIMPLIFIED HOME OFFICE DEDUCTION AVAILABLE FOR 2013 RETURNS

Check out Rev-Proc 2013-13 to learn about a simplified way that taxpayers can calculate the home office deduction starting in 2013. Here is the press release issued by the IRS regarding this time saver:

IRS Announces Simplified Option for Claiming Home Office Deduction Starting This Year; Eligible Home-Based Businesses May Deduct up to $1,500; Saves Taxpayers 1.6 Million Hours A Year

IR-2013-5, Jan. 15, 2013

WASHINGTON — The Internal Revenue Service today announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes.

In tax year 2010, the most recent year for which figures are available, nearly 3.4 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction).

The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.

"This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction," said Acting IRS Commissioner Steven T. Miller. "The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013."

The new option provides eligible taxpayers an easier path to claiming the home office deduction. Currently, they are generally required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form.

Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.

Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible.

Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. 

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TAX AND FINANCIAL PLANNING CALENDAR FOR FEBRUARY 2014

Month

Income Taxes

Saving and Investing

 

February

  • Get a jump on your tax prep and call one of the MDTAXES CPAs by 2/28/14 to set up an appointment
  • Organize your tax information
  • Try to have holiday credit card balances paid off by 2/28/14

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2013 & 2014 TAX FACTS

  • For 2013, the standard deduction for a single individual is $6,100 and for a married couple is $12,200. A person will benefit by itemizing once allowable deductions exceed the applicable standard deduction. Itemized deductions include state and local income taxes (or sales taxes), real estate taxes, mortgage interest, charitable contributions, and unreimbursed employee business expenses.
  • For 2013, the personal exemption is $3,900. Individuals will claim a personal deduction for themselves, their spouse, and their dependents. 
  • The maximum earnings subject to social security taxes is $117,000 for 2014, up from $113,700 in 2013.
  • The standard mileage rate is $.56 per business mile as of January 1, 2014, down from $.565 for 2013.
  • The maximum annual salary deferral into a 401(k) plan or a 403(b) plan is $17,500 in 2013 and 2014.  And if you'll be 50 or older by December 31st, you can contribute an extra $5,500 into your 401(k) or 403(b) account that year.
  • The maximum annual contribution to your IRA is $5,500 for 2013 and 2014.  And if you turn 50 by December 31st, you can contribute an extra $1,000 that year.  You have until April 15, 2014 to make your 2013 IRA contributions. 

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Need Help With Your Nanny Payroll?
 

This Month's Topics

Tax Guide For Physicians Working As Independent Contractors

8 REsplendent REsolutions REdux

Simplified Home Office Deduction Available For 2013 Returns

The FICA Refund for Medical Residents 

2013 & 2014 Tax Facts

Tax and Financial Planning Calendar for February 2014

 

NEWSLETTER ARCHIVES
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WHAT'S NEW WITH THE FICA REFUND?

In a shocking development, the IRS recently announced that they will be honoring the FICA tax refunds submitted by residency programs and individual doctors.  The catch is that only FICA taxes paid prior to 4/1/05 qualify.

For more information, go to our April 2010 Newsletter, our January 2009 Newsletter, or our February 2001 Newsletter or read through the IRS' Chief Counsel Advice Memorandum on this issue.

Let's work together to keep current on this hugely valuable tax break.  Please post whatever you read or hear regarding this FICA issue on our new Message Board we set up just for this topic.

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