There are a number of possible deductions that physicians can take advantage of, but most docs only know of a few. In fact, doctors are benefiting from only 40 tax deductions out of a possible 400. While you may not need to use that many, finding additional deductions could mean the difference between decent savings and great savings. Here are a few deductions that are most likely to help you out.
Charitable Donations
By donating goods you no longer need like clothes, toys, office furniture and electronics, you can earn tax deductions while helping others in need. Throughout the year, be sure to keep an accurate list of your donations. Keep in mind that monetary contributions must be made to qualified organizations and that there may be limits on how much you can donate based on your adjusted gross income.
Business Expenses
Some business expenses that doctors can deduct from their taxes include professional expenses such as medical journal subscriptions for the waiting room, required work clothes, even dues to medical societies and organizations. These deductions can only be taken if the physician makes these itemized deductions. Travel is another deductible expense that some physicians overlook. There are a large number of conferences and conventions that doctors attend throughout the year, and some doctors even travel to see a patient. Travel-related expenses like transportation, housing, meals and entertainment are also tax deductible.
Tax Credits for Children
As cited in a previous blog post, children can reduce your taxes. Physicians who are also parents may not be aware of the benefits that are available to having kids. For example, the Child Tax Credit lets you claim $1,000 for each child 17 years and younger, “provided your income does not exceed certain amounts.” There is also the Adoption Credit which allows adoptive parents to claim $12,650 per child under the age of 18.
Saving for Retirement
We recently addressed the importance of saving for your retirement and how having a retirement plan could yield bigger savings. There are also a few sizable tax deductions that can be made depending on which retirement plan you choose. The Saver’s Credit is a federal tax credit that encourages individuals to save for retirement and can range from 10-50% of savings based on your overall income. Also consider contributions made to a 401(k). These deductions are made pre-tax, making it one of the most popular retirement plans.
With tax season looming, be sure to do your research on any tax deductions that you may be eligible for as a physician, business person and parent.
