With the New Health Care Reform Law, many medical professionals are second guessing staying in the medical field. Not only do medical doctors have to be concerned with the new burdens the Health Care Reform Law brings, they are also heavily burdened with income taxes. After spending several years to become a doctor and make an above average income, many doctors probably never thought about how that income could cause them to generate so much income tax.
If you’re a doctor, not only are you paying income taxes, but in some cases, depending on how your income is paid to you, you may be paying alternative minimum tax as well as self-employment tax. Your tax bracket may be as high as 39% when you compare your total tax bill to your total taxable income. It may have crossed your mind once or twice as to whether or not there is anything you can do to lower your taxes. You may think that you’re working really hard but not really seeing the results of labor.
In this economy and with the business climate we currently have, it has become more evident that individuals have to use every avenue possible to become better stewards of their money. Taking control of your financial destiny requires reviewing and putting strategies in place to build wealth. One of the largest bills we pay is our taxes. We pay more in taxes than we do on any other household expense, aside from our mortgage or rent. In the case of doctors, their taxes are often times higher than their mortgage.
Understanding that you have control over the amount of income taxes you pay is the first step to getting a lower tax bill. The U.S. Tax Code has over 80,000 pages and there are many strategies in the tax code for medical professionals. If you have kept up with the news lately, you may have heard that General Electric will not be paying any taxes when it files its 2010 taxes.
If you are a medical professional and want to build wealth, start with putting a tax strategy in place to lower your income taxes. Utilizing strategies with things you probably already have is really easy to do. If you have a spouse or children, there are several strategies you can use for your family.
Think about employing your children or even creating a family foundation; using simple things can save you thousands. It all starts with changing your thinking.