Technology Deduction for 2011: “If you purchased or financed medical equipment in 2011, don’t overlook your tax write-off: up to $500,000 of your equipment and software costs are deductible through IRS section 179,” says Jason Biro, a 15-year veteran of the lending industry who heads up medical finance for Bank of America. Biro, who specializes in financing for private practice physicians, gives this example: if you purchased an EMR system for $50,000 and your tax bracket is about 35%, your tax savings will be $17,500. This savings applies to new and used equipment and most software.
Equipment & Software for 2012: Thanks to the Tax Relief Act of 2010 and the Jobs Act of 2010, you can still deduct equipment and save money in 2012. In fact, 2012 allowable deductions have increased. If you purchase equipment or software in 2012, you can deduct a total of $139,900 (for capital purchases up to $560,000), Biro says. “Overall, if you need to invest in software, hardware, or other technology – and you are contemplating purchasing or leasing in 2012 – these types of tax savings usually make purchasing the clear winner, and a financially-sound decision.”
Missed Opportunities: Physicians’ most missed opportunities in tax savings are retirement plans, says Lee of Strategic Wealth Associates. “Physicians may have opportunities to install defined contribution and/or defined benefit retirement plans that would allow them to make significant contributions to the plans on a pre-tax basis,” says Lee, who said that these plans could be set up to allow for a higher percentage of the contributions to be allocated for the physician compared to the rest of the staff.
Paperwork Trail: Usually the most missed opportunities and increases in risk result from the inappropriate documentation of business expenses, says Don McAnelly, principal at Rehmann, a tax planning and consulting service. “Whether it’s business-related auto use, meals and entertainment, or other areas of expense, many times physicians do not properly document these areas and miss out on potential opportunities for tax savings,” McAnelly says.
Looking Ahead: Physicians should be looking at the past and the future – but spend much more time concerned about the future, experts advice. Physicians should be looking ahead to the next 2-3 years, especially with the potential end of the Bush-Era tax cuts coupled with tax implications that might occur with Obamacare, McAnelly says. “Given the current uncertain tax environment, physicians will want to meet with an advisor and focus on a long-term approach to tax planning as compared to a single-year focus.”
