Taxes, Job Search and Malpractice Insurance Premiums
New Tax Legislation: How does it affect physicians?
The American Taxpayer Relief Act of 2012 was signed into law on January 2, 2012. It includes new tax rates, restrictions on itemized deductions and exemptions, and extensions of certain deductions and credits. This act affects physicians the same way it affects others who make salaries approaching the law’s new limits.
For example, the new tax rate for married-filing-jointly taxpayers who make more than $450,000 in 2013 will rise to 39.5%. For those with taxable income of more than $450,000, capital gains rates will increase to as much as 20%. On the other hand, if you are still in residency or fellowship, and you happen to have some money available to buy a house, you might want to do that soon. The zero-percent capital gains rate is still in place for those who make less than $72,500 (joint) or $36,250 (single).
The Act returns former limitations on itemized deductions. That means, in 2013, if your adjusted gross income is more than $300,000 (married, filing jointly), the amount of tax you pay will probably increase. If you are a retired doctor, you need to know about the provision that allows you to donate as much as $100,000 to a qualified charity in place of a required distribution, without the distribution being included in your gross income. If you lease office space, you might be able to claim bonus depreciation, and use it to write off as much as 50% of new assets.
Read more highlights of the Act in the McFarlin & Brokke PC newsletter, and ask us how we can help you sort out and take advantage of all possible tax benefits as a physician.
Best Places to Get Jobs: Consider Shortage Areas
When you are looking for a physician position, it’s tempting to think only about plum jobs in high-powered institutions or prestigious high-income-producing private practices. The type of job you seek will have a lot to do with your personality, you family’s needs and your ultimate goals. One important consideration is this: where are you most likely to find the jobs? We know of a tool that might help you determine this.
The U.S. Department of Health and Human Services, Health Resources and Services Administration (HRSA), publishes a list of geographic, demographic and institutional areas where there is a shortage of medical providers. Jobs in these areas might be especially suitable for doctors who have an inclination to serve underserved populations (a common physician cause). These areas also could be good possibilities for doctors who need to gain experience before applying for more competitive positions.
To make use of the HRSA locator tool, first look up the area in which you are looking for a job. Then consult job listings and match openings to the areas identified as having a shortage. When you apply for these positions, be sure to let the hiring professional know you are aware of this aspect of the opening, and express your commitment to service that will help them reach their goals.
Medical Liability Monitor Reports Drop in Malpractice Premiums: What Does it Mean?
In 2003 and 2004, premium rates or medical malpractice insurance increase a whopping 20%. According to a report in a recent Medscape.com article, some in the medical community believed “a broken medical liability system boosts insurance premiums for physicians.” However, rates have fallen in the past three years. This might be because of a drop in claims against physicians. New laws in some states might have contributed to the decrease in rates. Although the MLM report isn’t segmented for different specialties, it includes helpful information about malpractice insurance rates in different geographic areas.
As you might imagine, the rates are linked to how much money insurance carriers can make. With rates high and claims low, they are able to offer reduced rates—and it helps them be more competitive as they look for new policyholders. The rates are expected to drop until the margin between premiums and the cost of claims is squeezed too tight, and then rates will go back up again. One of the article’s sources believes it will take several years for rates to go back up. In Medscape’s article, read more about how and why malpractice rates fluctuate and what experts expect.
Securities offered through ValMark Securities Inc. Member FINRA, SIPC, 130 Springside Drive, Suite 300 Akron, Ohio 44333-2431, 800-765-5201. Fee planning and consulting services offered through Professional Advisory Group, a state registered Investment Advisor. Professional Advisory Group is a separate entity from ValMark Securities, Inc. Any tax advice contained herein is of a general nature. Further, you should seek specific tax advice from your tax professional before pursuing any idea contemplated herein. This advice is being provided solely as an incidental service to our business as financial planners.