Most people I talk to about their IRS problem have already built the worst-case scenario in their head. The reality is usually much more manageable. I'm Darrin Mish, and I've been representing taxpayers before the IRS for 32 years. Here's what actually tends to happen.<\/p>\n
Before I write about more tax deductions that resident physicians can make, allow me to mention some of the expenses that can be made on a Schedule C (that I brought up in yesterday\u2019s article) because this can get rather complicated. For example, residents can deduct the standard mileage rate of 32.5 cents per mile if you drive between jobs, like when you travel from the hospital where you work to the clinic where you moonlight. But you are not eligible for mileage deductions if you drive from your home to the clinic, unless you qualify for having a home office. On the other hand, having a home office entails a lot of other tax-code complications. So if you do claim mileage deductions, be sure to keep a detailed log of dates and miles you travel in order to substantiate your claims. \u00a0Click here to read or watch more IRS Help resources.<\/a><\/p>\n Along with the right to claim deductions without much restriction comes some downsides, too. Since you are considered an independent contractor when you moonlight, you have to pay all of your social security and Medicare contributions, known as Federal Income Contributions Act (FICA) taxes. FICA contributions equal 15.3% of your net Schedule C income, after deductions, if your net income exceeds $400.<\/p>\n Thus far, I have written about 4 tax deductions applicable to resident physicians namely tax-deferred retirement plans, health insurance premiums, unreimbursed work expenses and business expenses. Now let\u2019s continue with other tax deductions for resident physicians.<\/p>\n 5. Tax-deductible Loans<\/p>\n Like most people, you probably have consumer loans like a mortgage, car loans, credit card debts (which is a form of loans), student loans etc. Here\u2019s a tax tip \u2013 convert your loans into loans with lower interest that are tax-deductible, like mortgage loans. For example, if you have a student loan of $100,000 at 6.5% interest and a mortgage of $500,000 at 5% interest. You can refinance your home and take up a $600,000 mortgage at 4% interest and use $100,000 to pay off your student loan. That way you can reduce the interest rate on the mortgage, and make the student loan interest deductible<\/a>. The same strategy applies to car loans, credit card debts etc.<\/p>\n 6. Charitable donations<\/p>\n If you make donations in cash or kind, you are eligible to claim deductions on what you give (assuming you have enough total deductions to justify itemizing them). This includes the time you contribute to the charity\u2019s cause. Use any tax software to calculate the monetary amount you donate. You can also count the miles used to drive to and from the charity and any other expenses you incur as you donate your time.<\/p>\n 7. Tax Loss Harvesting<\/p>\n Tax loss harvesting means selling an investment at a loss (such as a stock) and buying another one closely related to one you sold. You might sell \u201cCompany X\u201d Total Stock Market Index Fund and buy \u201cCompany X\u201d 500 Index Fund. These two funds generally rise and fall together, but are considered different investments. Doing this allows you to deduct up to $3000 a year of investment losses against your ordinary income.<\/p>\n","protected":false},"excerpt":{"rendered":" Most people I talk to about their IRS problem have already built the worst-case scenario in their head. The reality is usually much more manageable. I'm Darrin Mish, and I've been representing taxpayers before the IRS for 32 years. Here's what actually tends to happen. Before I write about more tax deductions that resident physicians […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"rop_custom_images_group":[],"rop_custom_messages_group":[],"rop_publish_now":"initial","rop_publish_now_accounts":[],"rop_publish_now_history":[],"rop_publish_now_status":"pending","footnotes":""},"categories":[4],"tags":[],"class_list":["post-17460","post","type-post","status-publish","format-standard","hentry","category-irs-help"],"_links":{"self":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17460","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/comments?post=17460"}],"version-history":[{"count":2,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17460\/revisions"}],"predecessor-version":[{"id":29007,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/posts\/17460\/revisions\/29007"}],"wp:attachment":[{"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/media?parent=17460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/categories?post=17460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/getirshelp.com\/blog\/wp-json\/wp\/v2\/tags?post=17460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}