Tax deduction

[STATscans]

It is tax season again and as I prepare my stuff, it got me thinking. Are you able to get any real tax deduction? Am I just not cleaver enough? (Or I should say, my accountant, who always tells me I make too much to claim anything). I always hear on the media, ‘the rich don’t pay their share of taxes’. Or, ‘the rich are getting a tax break’.

So here I am several years into practice and can’t say I accept these statements.

1) mortgage interest - not deductible
2) student loan interest - not deductible (well when I used to have it, paid off now)
3) spent close to 50k on IVF-related stuff - not deductible
4) state tax - not deductible
5) charity donation? Yes, in my yearly taxes.
6) real estate - don’t own any
7) adoption - not deductible


Basically, there’s not much to ‘write off’. Am I wrong? Are you guys finding ways to decrease your tax? I did get a Tesla a few years ago and got the $7500 federal tax credit. That’s about it.

[ENT Doc]

It is tax season again and as I prepare my stuff, it got me thinking. Are you able to get any real tax deduction? Am I just not cleaver enough? (Or I should say, my accountant, who always tells me I make too much to claim anything). I always hear on the media, ‘the rich don’t pay their share of taxes’. Or, ‘the rich are getting a tax break’.

So here I am several years into practice and can’t say I accept these statements.

1) mortgage interest - not deductible
2) student loan interest - not deductible (well when I used to have it, paid off now)
3) spent close to 50k on IVF-related stuff - not deductible
4) state tax - not deductible
5) charity donation? Yes, in my yearly taxes.
6) real estate - don’t own any
7) adoption - not deductible


Basically, there’s not much to ‘write off’. Am I wrong? Are you guys finding ways to decrease your tax? I did get a Tesla a few years ago and got the $7500 federal tax credit. That’s about it.

#1 and 4 depends on the amount and if over the standard deduction. #3 depends on if over 7.5% of AGI - if so, that amount over is put on your schedule A. Adoption credit has a phase-out that you're probably over.

The rich pay PLENTY. Don't listen to the media. We have nearly 50% of people who pay no income tax (though they pay other taxes) and utilize services. That all being said, I think nearly all credits and deductions should be done away with.

[FIREshrink]

Mortgage interest is deductible why do you say otherwise?

State and local taxes are deductible too, up to $10k.

Obviously Max our your retirement accounts.

Tax code basically favors business owners and real estate investors so if you ain't one of them your options are limited.

[Brains428]

A lot of loopholes are closed for physician employees. You may be able to catch a break if you own your own practice or real estate.

If you have an FSA or HSA you can use that for IVF, right? Not tax deductible, but pre-tax income.

Another to add to the list (pertinent to this year for many)- no home office deduction.

[FunkDoc83]

You are not wrong, if you want to pay less tax, work less. There are no secret tax deductions I'm aware of.

[FunkDoc83]

I think nearly all credits and deductions should be done away with.

Why do you think that?

[zlandar]

As an individual? Very limited. I submit business mileage to our group practice which is a S corp. Practice reimburses me and it can take the deduction.

On my state taxes I have 529 deduction. There is also a tax credit program for rural hospitals in my state. You used to be able to buy tax credits that could be used for state taxes + counted as a charitable deduction on your Federal taxes. It was wildly popular until the Treasury nixed the charity deduction. I still buy credits but I do it by donating appreciated ETFs to one of the qualified hospitals and save on the long-term capital gains. Hospital has a foundation that is a charity and accepts stock donations.

[Brains428]

ENT Doc- Do you want a flat tax? Or what's a better way to structure it?

[ENT Doc]

Why do you think that?

They give preferential treatment and distort markets. Take the interest deduction, for example. Makes the costs of borrowing lower, increases home prices. Take state tax deduction. Makes the state tax less painful and makes you less inclined to get on your local rep and say "what the heck are you doing with my taxes". Both also make future generations subsidize your living since it gives up tax revenue and creates the need to take out debt. Credit for having a kid? Give me a break. That's not incentivizing anything and purely giving up tax revenue, which forces taking out debt or raising taxes on other things that shouldn't be taxed more (like income).

[Peds]

i feel SALT + mortgage interest + charity could break 25K.....and get you that $1 off you seek.....

[ENT Doc]

ENT Doc- Do you want a flat tax? Or what's a better way to structure it?

I would scrap most deductions and credits. Then I would reduce spending (please, someone give me a red pen and a royal crown for a day). Then I would flatten the tax brackets (maybe not a complete flat tax but at least making everyone accountable and not just some people). Perhaps most importantly, I would tax things that create negative externalities - non-recyclable trash, carbon, some combo of calories/bad calories/junk food, tobacco, etc. This would allow for free choice but with the consequences that should come with those choices. I would also tax people attempting to cancel one another and politicians every time they lied (with progressive rates for the amount of lies).

[Hatton]

Even in retirement there are a few. Donor Advised Funds, tax loss harvesting, and 10k state and local taxes.

[billy]

I'm assuming you're W2? Then yes, you are limited (as am I) in tax deductions. Uncle sam likes investing in businesses, hence a 1099 person can write more off. Are you saying you don't have stuff that you can itemize to put you over the standard deduction? Does your state have taxes? You may be able to write off IVF expenses on your state taxes if it meets the threshold and is allowed. Some states allow deductions for 529 plans for kids. It is what it is. I wouldn't go searching for shady "write offs". The student loan interest is annoying I'll agree to that. I am confused about why your mortgage interest cant be deducted- https://www.irs.gov/publications/p936.
Other thoughts:
Part of your state taxes can be deducted (they make up part of the 10k SALT)- only if you can itemize over the standard deduction
Traditional 401k/retirement plans. Deferred comp plans if available and you deem them worthy enough
HSA
Big contribution to DAF/charity- may help get you over the standard deduction
TLH investments, foreign tax credit
Standard deduction

FWIW- my deductions this year:
Fed:
standard deduction
charity (bc of covid can do $300 even with SD)
TLH
Foreign tax credit for index funds in taxable
Also maxed out 401k

State but not federal:
med expenses
rent (NJ allows a percentage to be deducted as property taxes)

Yeah not much you can do as a w2 if you don't own real estate or have a side gig.

[STATscans]

https://www.bankrate.com/mortgages/trumps-housing-legacy/

I thought Trump got rid of home mortgage interest deduction?

[STATscans]

A lot of loopholes are closed for physician employees. You may be able to catch a break if you own your own practice or real estate.

If you have an FSA or HSA you can use that for IVF, right? Not tax deductible, but pre-tax income.

Another to add to the list (pertinent to this year for many)- no home office deduction.

Yes I have HSA. But we just paid cash for IVF as I was hoping the HSA will grow and we can use it down the line when a real medical issue comes up (hopefully when I’m like 90s years old).