Help with taxes

[DrMoneyTails]

thank you for the quick reply as always!

[jfoxcpacfp]

DrMoneyTails wrote:

I cannot deduct my subspecialty boards or my expenses with licenses from my W2 as it is not above 2% of my income. But could I deduct it from the 1099 income? Can I deduct the costs of Medical license in a different state for my attending job later this year, which will not be reimbursed?

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You can deduct part against the 1099 income. iow, if the boards were necessary for only the 1099 or only the W2 income, you can deduct accordingly. But if the expenses are for the practice of medicine in general and would apply to both, then you allocate to each. (ahem, every time I answer an iteration of this question, I am fully cognizant that it is probably not adhered to by most of the DIY preparers in the forum and I will leave at that without passing judgment.)

I believe there was a question yesterday about a 2016 bonus from out of state on 1099 for a 2017 contract and the oos licensing costs. In that case, I am fine with deducting the full amount against the related 1099 income.

[DrMoneyTails]

Getting ready to file taxes.. Have another question!

I received U$1,000 in 1099-MISC from the American Thoracic Society as a scholarship prize for an abstract in my subspecialty. So now I have two 1099s in addition to my W2. The 1099s total U$ 6,200.

I cannot deduct my subspecialty boards or my expenses with licenses from my W2 as it is not above 2% of my income. But could I deduct it from the 1099 income? Can I deduct the costs of Medical license in a different state for my attending job later this year, which will not be reimbursed?

 

[jfoxcpacfp]

DrMoneyTails wrote:

Contribute to both a traditional IRA and a SEP IRA. Then in 2017 open an Individual 401k (at Fidelity, since Vanguard does not accept rollovers) and rollover both IRAs into the individual 401k.   What do you guys think of that? Is that a good idea?

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Sure, if you need to open a retirement account for 2016. It is too late to open a SOLO-k but you have until 10/15/17 to open a SEP. You'll be able to contribute 25% of net profits.

[DrMoneyTails]

Another suggestion someone gave me:

Contribute to both a traditional IRA and a SEP IRA.

Then in 2017 open an Individual 401k (at Fidelity, since Vanguard does not accept rollovers) and rollover both IRAs into the individual 401k.

 

What do you guys think of that? Is that a good idea?

[DrMoneyTails]

DMFA wrote:

All the non-reimbursed expenses related to doing your job are deductible, including mileage between work sites. All of those count, as do any medical app subscriptions, stethoscope, white coat, etc. Could even consider your phone bill, data plan, etc if it’s the phone you use for your job. If you’re W-2 employed, though, then you can only deduct expenses above 2% of your income.

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Got it. Thanks!

[DMFA]

All the non-reimbursed expenses related to doing your job are deductible, including mileage between work sites. All of those count, as do any medical app subscriptions, stethoscope, white coat, etc. Could even consider your phone bill, data plan, etc if it's the phone you use for your job.

If you're W-2 employed, though, then you can only deduct expenses above 2% of your income.

[DrMoneyTails]

Are any of these expenses tax deductible:

1) I had to apply for a full unrestricted license as well as a DEA this year (required for my moonlighting job as well as for my "day" job in fellowship)

2) Subspecialty boards

3) Medical license in a different state for my attending job later this year, which will not be reimbursed

 

[DrMoneyTails]

I believe you can use this calculator to figure it out:

https://apps.irs.gov/app/withholdingcalculator/

[FutureDoc]

Slight hijack, maybe someone more experienced than me could chime in.

This thread worries me.  My wife and I are dual residents and thanks to only working half a year and having a kid we're looking at owing virtually nothing for 2016 in taxes.  However we each claimed 3 on our W4's when we started residency and haven't changed, and especially since we're making roth contributions it just occurred to me that we might end up undercontributing and get burned come next april.

Stats: 105k income, 5k in HSA, 5k childcare FSA, 10k in Roth contributions, have one dependent kid.  Not enough to itemize, taking standard deduction.  Might start moonlighting in the fall as well.

 

Should I change our witholdings to 0 to cover increased liabilities this year?

[DrMoneyTails]

Got it. Okay, thanks!

[jfoxcpacfp]

DrMoneyTails wrote:

Am still confused as to what would be best to reduce my tax burden. Should I open a traditional IRA and contribute 5500 to it, and also do a SEP IRA and put in 20% of my net profits? Would it all be tax deductible? And how would that affect my ability to do a Backdoor Roth in the future?

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Yes, that would all be deductible. A SEP is considered an "employer" plan while a TIRA is a "personal" account. i see no reason to co-mingle your TIRA with your SEP. You won't want to convert to a back-door Roth while you have a balance in either of these accounts, though. You need to have some moonlighting income in 2017 in order to set up a SOLO-k for 2017. You can then roll your TIRA and SEP into the 401k before 12/31 and qualify to do the tax-free back-door Roth.

DrMoneyTails wrote:

And another question, for 2017, I will have a W2 from my current job (fellowship), a W2 from a part time job (Fee basis physician at a VA), and starting in August 2017, a W2 from my attending job. None of those give me access for a retirement plan in 2017. Would I be eligible to open a Solo 401K in 2017?

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No. As I mentioned above, you need self-employment income to open a SOLO-k.

[DrMoneyTails]

 

jfoxcpacfp wrote:

Actually, yes, sorry for overlooking that. I was so focused on the math I overlooked the logistics   ! At this point, you are limited to a SEP IRA, which is 20% of net profits. Going forward, you can set up the SOLO for 2017 and r/o the SEP into it.

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Ok, got it. Am still confused as to what would be best to reduce my tax burden. Should I open a traditional IRA and contribute 5500 to it, and also do a SEP IRA and put in 20% of my net profits? Would it all be tax deductible? And how would that affect my ability to do a Backdoor Roth in the future?

From the IRS (I'm having a hard time wrapping my brain around that, lol):

If I participate in a SEP plan, can I also make tax-deductible traditional IRA contributions to my SEP-IRA?

If the SEP-IRA permits non-SEP contributions, you can make regular IRA contributions (including IRA catch-up contributions if you are age 50 and older) to your SEP-IRA, up to the maximum annual limit. However, the amount of the regular IRA contribution that you can deduct on your income tax return may be reduced or eliminated due to your participation in the SEP plan.

And another question, for 2017, I will have a W2 from my current job (fellowship), a W2 from a part time job (Fee basis physician at a VA), and starting in August 2017, a W2 from my attending job. None of those give me access for a retirement plan in 2017. Would I be eligible to open a Solo 401K in 2017?

[jfoxcpacfp]

DrMoneyTails wrote:

Ok, got it. But is it too late for me to do a Solo 401K? “The deadline for establishing an Individual 401k is December 31st of the year in which you would like to receive the tax deduction or fiscal year end for corporations.”

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Actually, yes, sorry for overlooking that. I was so focused on the math I overlooked the logistics  ops: ! At this point, you are limited to a SEP IRA, which is 20% of net profits. Going forward, you can set up the SOLO for 2017 and r/o the SEP into it.

[DrMoneyTails]

jfoxcpacfp wrote:

DrMoneyTails wrote:

Thank you for the detailed response!

I won’t be able to do both a 5500 contribution to a traditional IRA and also putting money in a solo 401k. Which one would be better? I do plan on doing a Backdoor Roth in the future once my salary increases as an attending, so I do worry about having a deductible traditional IRA.. is it too difficult to “get rid of it” in the future? as in, rolling it over into some other account?

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If you have a SOLO-k, you’ll be able to r/o your TIRA into it, easy peasy. You can do a little of both or you can max out the SOLO and contribute any extra $$ you have to the TIRA. It doesn’t matter how you divide it up, it’s the same effect on your taxable income. I’d start wth the SOLO so you’ll have that account to receive any future 401k/403b rollouts – it’s a very valuable account for that reason.

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Ok, got it.

But is it too late for me to do a Solo 401K?

"The deadline for establishing an Individual 401k is December 31st of the year in which you would like to receive the tax deduction or fiscal year end for corporations."