Announcement

Collapse
No announcement yet.

Tax Deduction for massive tail insurance payment as mostly W2 employee?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Tax Deduction for massive tail insurance payment as mostly W2 employee?

    My wife and I are both early career surgical subspecialists, and we have relocated this year to another state. While we tried to avoid it, we ended up having to pay our tail malpractice insurance out of our own pocket. The cost was nearly $50K between us. The vast majority of our income is as W2 employees with less than 10% coming in as a 1099 for call shifts, bonus, etc. We don't have an LLC or pass through entity set up.

    The research I have done makes it seem that I will not really be able to deduct this large malpractice payment, as business expenses for w2 employees was done away with in 2018. Maybe I can deduct a small portion via the 1099 income, but I'm certainly looking to deduct much more of the $50K.

    Would consulting a CPA or tax strategist be worth time/money to see if there is a clever way to save lots of money on my taxes this year? Or do we just have to bite the bullet on this one? Any other strategies you might recommend?

    Any help/advice is welcome! Thanks!

  • #2
    Beginning in 2018, employee business expenses were designated nondeductible. In these cases, I typically recommend that the employee negotiate with the new employer to pay the tail in exchange for a reduced signing bonus or pay reduction.

    Yes, you should be able to allocate a proportionate amount of the tail to your 1099 income but I realize it’s the remainder that really matters. Is there a way to approach your new employers to adjust their reporting? It’s no skin off their backs, but a little more administration to get the records adjusted.,
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

    Comment


    • #3
      Originally posted by jfoxcpacfp View Post
      Beginning in 2018, employee business expenses were designated nondeductible. In these cases, I typically recommend that the employee negotiate with the new employer to pay the tail in exchange for a reduced signing bonus or pay reduction.

      Yes, you should be able to allocate a proportionate amount of the tail to your 1099 income but I realize it’s the remainder that really matters. Is there a way to approach your new employers to adjust their reporting? It’s no skin off their backs, but a little more administration to get the records adjusted.,
      Much thanks for your help! But I think we missed the boat on this one. We payed the insurance bill a couple of months ago and have been working for a couple of months now, so we're probably out of luck. I will try to talk to our new employers to see...

      Comment


      • #4
        Originally posted by eyecutter View Post

        Much thanks for your help! But I think we missed the boat on this one. We payed the insurance bill a couple of months ago and have been working for a couple of months now, so we're probably out of luck. I will try to talk to our new employers to see...
        Never hurts to ask but you need to do asap. They may be willing to help, but not after year-end reports are prepared in January.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

        Comment

        Working...
        X