Introduction to our “2021 Tax Updates – What Anesthesiologists Need to Know” eBook:
Congress passed a massive tax reform bill in December 2017. Ever since the bill was passed, Fusion Anesthesia been getting calls and emails from anxious clients wondering how the bill will affect them. Each year, there are updates to this bill.
The complete bill runs about 600 pages. We’ve distilled what anesthesia providers need to know to 20 pages. This eBook is updated with the 2021 tax updates.
As a high-earning individual, many of the changes in this latest tax reform directly impact you.
- How the new laws will impact your personal taxes as a high-earning individual (anesthesia provider).
- How the changes impact business taxes and the best corporate structure for your anesthesia practice.
Before we get started, here are a few key terms you’re going to need to know:
- Adjusted Gross Income (AGI): Total income for tax purposes. AGI is calculated by taking all income (wages, interest, dividends, other business income, etc.) and subtracting adjustments (business expenses, HSAs, self-employed insurance deductions, etc.).
- Taxable income: Income that is subject to taxes. It is calculated by subtracting standard or itemized deductions (whichever is higher) from your AGI.
- Alternative Minimum Tax (AMT): A tax created in 1969 to ensure wealthy individuals couldn’t get away with paying no taxes by utilizing various loopholes. This forced everyone to pay some taxes by eliminating certain deductions and taxing at a flat 26% or 28% rate. This tax was never adjusted for inflation, and as more Americans began making larger incomes, households generating between $200k and $500k of income were forced to pay this controversial tax. (see page 11 for how this has changed).
- Pease Limits (P-Limits): Surtax used to reduce the value of itemized deductions by 3% for every dollar of taxable income over a certain threshold.
- 2% Floor: For federal taxes, certain deductions are only deductible to the extent that they exceed 2% of your AGI.
- Qualified Business Income (QBI): Business income that does not come from service businesses where the “principal asset of such trade or business is the reputation or skill of one or more of its employees.” (See page 16 to learn more about QBI and why it’s problematic for most anesthesiologists).
- Pass-through Entity: A business entity that passes through its income to the owners of the business. This includes partnerships, LLCs, and S corporations.
Common Questions Include:
- Should I become an S corporation to take advantage of the pass-through deduction?
- Should I become a C corporation for the lower 21% rate?
- What about a sole proprietorship acting as a 1099 contractor?
- Can I game the system by splitting my business into several companies so that my income levels qualify?
- Should my spouse and I file separately?
- Should my spouse and I divorce to divide income?
Learn the answers to those and more – Download the complete 2021 Tax Updates – What Anesthesiologists Need to Know eBook here:
Tax eBook 2021