by The MDTAXES Network | Nov 17, 2015 | 2015 Year End Newsletter, Deductions
According to the IRS, to be deductible, an expenditure must be both “ordinary” and “necessary” in connection with your profession.? The IRS defines “ordinary” as common and accepted in a particular profession and “necessary” as helpful and appropriate for a particular profession.
Here?s a list of 16 professional expenditures commonly incurred by young health care professionals:
-
Automobile expenses
-
Beepers and pagers
-
Books/library
-
Cellular telephones?
-
Computer purchases
-
Education, examinations & licenses
-
Equipment & instruments
-
Job search
-
Malpractice insurance
-
Meals & entertainment
-
Parking & tolls
-
Professional dues, journals & subscriptions
-
Psychoanalysis as part of training
-
Supplies
-
?Travel & lodging
-
Uniforms & cleaning
?Please note:? Employees may not deduct professional expenses that are eligible for reimbursement from their employer.
by The MDTAXES Network | Dec 23, 2013 | IRS, Planning, Savings
Contributing to a retirement plan is one of the best tax shelters available to you during your working years.? Recently, the IRS announced that most of the retirement savings limits will NOT increase for 2014.
RETIREMENT PLAN LIMITS FOR 2014:
| ?Savings Opportunity |
Maximum Contribution for 2014
|
|
?401(k) or 403(b)?Deferrals
|
?$17,500 in 2014
|
|
?Roth and Traditional IRAs
|
?$5,500 per person
|
| ?Self-employed Retirement ? Plans
|
SEP or Keogh – $52,000/yr
Solo 401(k) – $52,000/yr
SIMPLE – $24,000/yr
|
|
?529 Plans
|
?$14,000 per donor (up to $70,000 in one year)
|
If you?ll be 50 or older by December 31, 2014, you can contribute an extra $5,500 into your 401(k), Solo 401(k), or 403(b) plan, an extra $2,500 into your SIMPLE, and an extra $1,000 into your IRA.
?
by The MDTAXES Network | Dec 18, 2013 | Deductions
According to the IRS, to be deductible, an expenditure must be both “ordinary” and “necessary” in connection with your profession.? The IRS defines “ordinary” as common and accepted in a particular profession and “necessary” as helpful and appropriate for a particular profession.
Here?s a list of 16 professional expenditures commonly incurred by young health care professionals:
-
Automobile expenses
-
Beepers and pagers
-
Books/library
-
Cellular telephones?
-
Computer purchases
-
Education, examinations & licenses
-
Equipment & instruments
-
Job search
-
Malpractice insurance
-
Meals & entertainment
-
Parking & tolls
-
Professional dues, journals & subscriptions
-
Psychoanalysis as part of training
-
Supplies
-
?Travel & lodging
-
Uniforms & cleaning
?Please note:? Employees may not deduct professional expenses that are eligible for reimbursement from their employer.
by The MDTAXES Network | Nov 25, 2013 | Taxes
[Editor’s Note] I started my career as a CPA specializing in taxes back in 1987, and right off the bat had to deal with the massive Tax Reform Act of 1986. Since that complicated set of tax rules was implemented more than 25 years ago, all I’ve seen is more and more complex tax rules enacted at an increasingly quick rate. Whether you’re a taxpayer or a tax advisor, there is barely even enough time to digest one set of rules before the next set is forced upon us. To make things more challenging, none of the old rules ever seem to be taken away as these new rules are enacted.
Well, the Affordable Care Act gives us all a bunch of new rules affecting our taxes, including a new Health Insurance Premium Tax Credit. Check out these Questions and Answers on the Premium Tax Credit provided by our friends at the IRS.
by The MDTAXES Network | Nov 21, 2013 | Savings
On Halloween night, the IRS announced the cost of living adjustments applicable to the various retirement plan limitations. Unfortunately, the bulk of the retirement savings limits will not increase from 2013.
According to the October 31st announcement made by the IRS on Pension Plan Limitations for 2014, “Some pension limitations such as those governing 401(k) plans and IRAs will remain unchanged because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment. However, other pension plan limitations will increase for 2014.”
No Increases for 2014
Most working professionals have access to a 401(k) plan or a 403(b) plan at work. Amounts contributed to these plans generally reduce your taxable earnings and always grow tax deferred. Like 2013, you can contribute up to $17,500 into a 401(k) or 403(b) plan through salary deferrals in 2014.
Anyone 50 or older by December 31, 2014 can contribute an extra $5,500 into their 401(k) or 403(b) plan through salary deferrals next year, for a total annual contribution of $23,000. That is the same as what was allowed during 2013.
Many smaller employers offer their staff access to SIMPLE/IRAs instead. SIMPLE’s work just like 401(k) plans, which means it’s up to you to fund the bulk of this retirement savings account through salary deferrals. For 2014, the maximum contribution into your SIMPLE remains at $12,000. Anyone 50 or older by December 31st can sock away an additional $2,500 in 2014, for a total annual contribution of $14,500, unchanged from 2013.
And if you are self-employed, you can contribute up to 20% of your net self-employment income into a SEP IRA. The maximum contribution into your SEP IRA for 2014 increases by $1,000 to $52,000.
Increase to IRAs
Don’t forget about IRA’s. Even if you’re covered under a retirement plan at work, you and your spouse can each contribute up to $5,500 into a traditional IRA or Roth IRA next year, as long as your combined wages and net self-employment income exceeds the total amount contributed. Anyone 50 or older can contribute an extra $1,000, increasing the total allowable contribution to $6,500. You have until April 15, 2015 to contribute to your IRAs for 2014.
There is a bit of good news for people looking to contribute to a Roth IRA in 2014. While the amount you can earn and still contribute to a Roth has not increased for single individuals, this threshold did increase by $2,000 for single individuals and $3,000 for joint filers as follows:
|
Single ? Individuals |
Married ? Couples |
| Phase-out ? begins |
$114,000 |
$181,000 |
| Phase-out ? ends |
$129,000 |
$191,000 |
If your income is too high for a Roth, don’t forget that the rules changed a few years ago, eliminating the income limitation as of 2010 for people looking to convert their IRAs to a Roth IRA. This tax law change provides high-income taxpayers with a great opportunity to get money into these tax-free investment accounts.
And finally, if you’re married and your spouse isn’t covered under either an employer sponsored or self-employed retirement plan during the year, the phase-out range for your spouse making a deductible IRA contribution has increased to $181,000 – $191,000, which is identical to the Roth IRA phase-out limits.
Re-Set Your 2014 Budget
Most people won’t be able to max out these tax-advantaged retirement options unless they get on a budget and put away a set amount of money each month. With 2013 winding down, now’s the time to start thinking about resetting your monthly retirement savings goals for 2014.
2014 Maximum Retirement Account Contributions:
|
Retirement Savings Option |
Under the age
of 50 |
50 or older by December 31st |
|
401(k) or 403(b) |
$17,500
($1,458.33/month) |
$23,000
($1,916.66/month) |
|
SIMPLE IRA |
$12,000
($1,000.00/month) |
$14,500
($1,208.33/month) |
|
SEP IRA |
$52,000
($4,333.33/month) |
$52,000
($4,333.33/month) |
|
Solo 401(k) |
$52,000
($4,333.33/month) |
$57,500 or
($4,791.66/month) |
|
IRA |
$5,500
($458.33/month) |
$6,500
($541.66/month) |
