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  • Tax Deduction Question

    I just joined a new private practice group who provides us with a $20k/yr business/healthcare expense account. At the end of the year, any left over funds in that account become W2 taxable income. I have paid closer attention to my deductions this year because I have more than I usually do.

     

    I've been told I can have some of those expenses (board exams, moving expenses, credentialing expenses, etc) reimbursed via my business expense account. For more context, I have about $8k in itemized deductions presently, and that leftover W2 income would likely be taxed at the 33% federal rate. From a tax perspective, which makes more sense: use the business expense account or use the tax deduction? Thanks.

  • #2




    I just joined a new private practice group who provides us with a $20k/yr business/healthcare expense account. At the end of the year, any left over funds in that account become W2 taxable income. I have paid closer attention to my deductions this year because I have more than I usually do.

    I’ve been told I can have some of those expenses (board exams, moving expenses, credentialing expenses, etc) reimbursed via my business expense account. For more context, I have about $8k in itemized deductions presently, and that leftover W2 income would likely be taxed at the 33% federal rate. From a tax perspective, which makes more sense: use the business expense account or use the tax deduction? Thanks.
    Click to expand...


    Not exactly sure I'm following you, but I'll give it a stab. By using the business expense account for business expense reimbursement you are, in effect, "using" the tax deduction. It seems pretty obvious to me that you should do that, since you have to pay the expenses anyway, so I really do think I am missing something. Please clarify further. Also, by "joined", do you mean you are a partner? That would change my answer somewhat.

    For moving expense reimbursement, be sure to track your legitimately allowed moving expenses in order for the reimbursement to count as nontaxable.
    Our passion is protecting clients and others from predatory advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      We have a similar expense account. You should know that there has been a rule change in the last few years, and health care expenses like deductibles, copays, prescription drugs, etc. are probably no longer reimbursable from such an account, as they once were.

      Do use the account for meetings (including related and legitimate travel expenses), educational expenses, society dues, licensing fees, cellphone for primary business purpose, and the like. Check with your new group's accountant if you need clarification.

      Edit: Oh, one more thing. Some groups (like ours) allow you to roll over unused funds to the next year. Hey, there might be a great international meeting of anesthesiologists in Paris next year, and you certainly will want the funds to attend it.

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