Tax Planning for the Dentist in an Era of Uncertainty

Presented by Erick Cutler, CPAFriday, November 30, 2012

Current Tax Planning

No surprises

Use of retirement accounts

Depreciation deductions

Wages & withholding

Alternative Minimum Tax

Pay higher of Regular or AMT

2011 AMT exemption $74,450

2012 AMT exemption $45,000

AMT Calculation

Current 2013Taxable Income 275,000 275,000Sch. A Taxes 13,000 13,000Other not included deductions 5,000 5,000AMT I 293,000 293,000AMT Exemption <75,000> <45,000>AMT (Rate 28%) 61,040 69,440

Regular Tax 55,000 55,000

Anticipated Changes

Payroll Tax Holiday

Rate to increase (4.2% to 6.2%) on first $110,000 of employee wages

Depreciation

§ 179 Expense Election

2012 Expense $139,000 (2013 $25,000)

2012 Investment ceiling $560,000 (2013 $200,000)Bonus Depreciation (gone after 2012)

Excise Tax on Medical Devices

2.3% tax on sale of medical devices

Tax is paid by manufacturer

Not on items purchased by general public i.e. eyeglasses, contact, hearing aids, etc.

Capital Gains

Long term rates (15% to 18%)

Additional 3.8% could apply

Qualified Dividends

Marriage Penalty

Standard deduction to decrease

$11,900 for 2012

$10,150 for 2013

Medical Expense Deductions

2012 limit is 7.5% of AGI

2013 limit is 10% of AGI

Tax Brackets

Rate Single Filers Married Joint Filers Head of Household Filers

10% $0 to $8,950 $0 to $17,900 $0 to $12,750

15% $8,950 to $36,250 $17,900 to $72,500 $12,750 to $48,600

25% $36,250 to $87,850 $72,500 to $146,400 $48,600 to $125,450

28% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,150

33% $183,250 to $398,350 $223,050 to $398,350 $203,150 to $398,350

35% $398,350+ $398,350+ $398,350+

2012 Brackets

Rate Single Filers Married Joint Filers Head of Household Filers

15% $0 to $36,250 $0 to $60,550 $0 to $48,600

28% $36,250 to $87,850 $60,550 to $146,400 $48,600 to $125,450

31% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,150

36% $183,250 to $398,350 $223,050 to $398,350 $203,150 to $398,350

39.6% $398,350+ $398,350+ $398,350+

Expected 2013 Brackets

Hospital Insurance Tax (HI)

Applies to wages received with respect to employment in excess of $250,000 ($125,000 MFJ & $200,000 single HOH)

Rate is .9% on amount in excess of above figures

Also applies to self-employment income

Hospital Insurance Tax

TP Wages 225,000SP Wages 55,000SP Sch. C 20,000TP LLC 25,000

Total Wage and SE income $325,000 → $75,000 over threshold

$75,000 x .9% = $675 additional tax

Medicare Surtax

Imposed on the lower of the filers net investment income or the excess of MAGI over thresholds ($250,000 MFJ, $125,000 MFS, $200,000 single or HOH)

Rate is 3.8%

Medicare Surtax

Investment Income

Includes Not Included•Interest •Tax exempt interest•Dividends •Payout from retirement

plans (401k, IRAs, Roths, Profit sharing defined benefits plans

•Cap Gains•Annuities•Royalties•Passive rental income

Medicare Surtax

Wages 210,000Interest 2,000Dividends 8,000Cap Gains 70,000AGI 290,000 → $40,000 over MAGI threshold

Lower of:3.8% x 80,000 = $3,0403.8% x 40,000 = $1,520

$80,000 NII

Tax Planning Strategies

Manage your taxable income for 2012

Defer tax deductible expenses to 2013

Consider acceleration of capital gains

Business owners:

Consider pushing deductions to 2013(employee bonuses)

Defer purchase of depreciable assets

Tax Planning Strategies

Defer net operating losses to 2013

Consider restructuring investment portfolios to manage future Net Investment Income to avoid additional Medicare tax

Retirement plans (implementation & evaluation of existing plans)

Tax Planning in anEra of Uncertainty

Current year tax planning

Awareness of changes and the economic environment

Broadened planning perspective

For Additional InformationContact

Erick Cutler, Partner Goldin Peiser & Peiser, LLP

ACutler@GPPcpa.com214-635-2541

www.GPPcpa.comDental.GPPcpa.com