Being adoctorcomes with a lot of stressors, but planning for taxes should not be one of them. As adoctor, you have been through years ofhard workand may be looking for ways to help limit your tax liability and preserve as much of your hard-earned income as possible. Below are some tax strategies thatdoctorsmay find useful to help minimize their tax liability.
Contribute More to Your Retirement Account Contributions
A great wayto limit your tax liability while also giving your retirement savings a boost is by contributing themaximumannual amount to any pre-tax retirement accounts. Whether it is a profit-sharing plan ora 401(k), you will be able to deduct the taxes on the contributions made during the calendar year. It also provides the added benefit of putting more in your retirement savings where it mayhave growth potentialtax-deferred until you are ready to start making your withdrawals. Themaximumamount you are allowed to contribute each year will be dictated by the IRS and may increase occasionally based on adjustments to the cost of living.
Look for Tax-Efficient Investments
Another tax strategy to consider is looking at the after-tax return rates on your investments to see how tax-efficient they are. For example, municipal bondscan potentially minimizetaxes in most cases. Always be aware of which investments will provide you with a greater after-tax return and work to incorporate these into your financial portfolio.
Keep UpWithTax Laws
Tax laws are constantlychangingand staying on top of these changes may allow you to better take advantage of the opportunities that they may present. For example, with the recent change in itemized deductions, it may be prudent to take the standard deduction orpossibly takeadvantage of bunching deductions. One way to bunch deduction would be through charitable giving. Instead of givingsmall amountsto charity each year, provide one large contribution which may put you over thethresholdmaking itemization themoreeffectiveoptionduring that tax year.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended toprovidespecific advice or recommendations for any individual. Todeterminewhich investment(s) may beappropriate foryou, consult your financial professional prior to investing.Investing involves risks includingpossible lossof principal.
The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.
Municipal bonds are subject to availability and change in price.They are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise. Interest income may be subject to the alternative minimum tax. Municipal bonds are federally tax-freebut other state and local taxes may apply. If sold prior to maturity, capital gains tax could apply.
All information is believed to be from reliable sources;howeverLPL Financial makes no representation as to its completeness or accuracy.
This article was prepared byWriterAccess.
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