1) Maximize Tax Savings Galore & Save Upwards of $30,000
Independent contractor doctors have the unique ability to drastically reduce their tax bill. Some of the bigger deductions include retirement contributions (in 2020, independent contractors can contribute up to $57,000* in a tax-deductible retirement plan), business expenses, the QBI deduction, and health insurance premiums. If you are able to fully take advantage of all these deductions, you could be deducting north of $140,000. Conservatively, if we consider a 24% tax bracket, that means saving about $34,000 in taxes in a single year. Want to talk to our team about your particular scenario?Make an Appointment Here
2) Accelerate Your Path to a “Work Optional” Lifestyle
As mentioned above, an independent contractor doctor can save up to $57,000* in a tax-deductible retirement plan (vs. $19,500 as a W-2 employee). If you choose to hire a spouse, an additional $24,000-ish can be saved. If that’s still not enough and/or you are looking to save even more in taxes, a Defined Benefit Plan can be deployed (aka “pension plan”). All of these strategies are unique to the independent contractor (1099) status. Work with a financial adviser who can help you decide what before and after-tax strategies are recommended to meet your financial independence goals. A good wealth manager should also be a fiduciary. Want to talk to one of our wealth managers about these various strategies?Make an Appointment Here
3) Design a Portable Benefits Package that Suites Your Needs
As an independent contractor, you can create your own custom insurance package rather than relying on a “set in stone” group benefits package. Working with a broker is a good idea as it allows you to see various options across carriers for items like health, disability, life and long-term care coverage. You have flexibility in choosing how much coverage fits your needs and budget. Although health and life insurance coverage have become straightforward throughout the years, the provisions for disability coverage can be more complex. Your biggest asset is your ability to earn future income – make sure this is well covered. For more details on what to look for in a disability insurance policy, see here. Do you want to receive competitive quotes from our team?Make an Appointment Here
4) Evaluate the Need for an Entity
There are several factors that determine whether or not you need to set-up an entity including income, marital status, your employer’s policy, etc. See here for more details. Some doctor’s choose to set-up an entity to save in Medicare tax. However, beware that with the introduction of the QBI deduction in 2018, this strategy isn’t always the most tax efficient. Work with your CPA to evaluate next steps or give us a call to speak to one of our CPAs.Make an Appointment Here
We are passionate about personal finance education, and we specialize in helping doctor’s maximize tax savings and personal wealth while also protecting current and future assets. We get it, you’re busy. Let us take care of the details.
You can reach us at 888-898-3627
See below for a few words from co-founder Terry Westlund who has partnered with clinicians for over 40 years.
*$63,500 for those over the age of 50
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