As a healthcare professional, you are likely aware of the significant doctor tax burden you face. The combination of high income and self-employment can result in a substantial portion of your earnings going to the government. However, there are many strategies you can employ to minimize your doctor tax liability.
Strategy | Estimated Tax Savings |
---|---|
Contribute to a 401(k) plan | Up to $20,500 per year |
Establish a SEP IRA | Up to 25% of self-employment income |
Deduct healthcare expenses | Up to 7.5% of AGI |
The doctor tax is a term used to describe the various taxes that doctors and other healthcare professionals must pay. These taxes include federal income tax, self-employment tax, and state income tax. The doctor tax can be a significant burden, especially for high-income earners.
Tax | Rate |
---|---|
Federal Income Tax | 10% - 37% |
Self-Employment Tax | 15.3% |
State Income Tax | Varies by state |
Dr. Smith contributed the maximum to his 401(k) plan and established a SEP IRA. He also deducted his healthcare expenses. As a result, he saved over $25,000 on his doctor tax bill.
Dr. Jones negotiated a lower self-employment tax rate with the IRS. He also started a part-time job in addition to his medical practice. By earning income from multiple sources, he was able to reduce his doctor tax liability.
Dr. Williams moved his practice to a state with no income tax. This single step saved him over $10,000 per year on his doctor tax bill.
By understanding the doctor tax and employing the right strategies, you can minimize your tax burden and keep more of your hard-earned income.
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