By Jim Rice, CPA
As a CPA for more than four decades, I’ve heard from doctors more than a few times after they were hit with a surprise tax bill. In most cases, the underlying problems were that their accountants didn’t communicate with them much and didn’t advise them throughout the year on what steps they could take to minimize their taxes, leading to unpleasant surprises.
One thing all of these physicians have made abundantly clear: Physicians don’t like surprise tax bills. Of course, no one does.
But surprises are avoidable. With preparation and communication, any physician’s federal tax picture can be managed calmly and without those dreaded 11th-hour surprises. Here’s how:
- Know your tax situation and estimate your taxes: You should estimate your federal taxes every year, especially if your income and expenses have changed. This can help you avoid a surprise tax bill at the end of the year. Work with a tax professional to estimate your taxes.
- Keep good records: Make sure you keep good records of your income and expenses, as well as any deductions and credits for which you may be eligible. This can help you accurately estimate your taxes and avoid any surprises at tax time.
- Review your withholdings: It’s important to review your paycheck withholdings regularly to make sure you’re having enough federal taxes taken out. If you’re not having enough withheld, you may end up with a big tax bill at the end of the year.
- Pay estimated taxes: If you’re self-employed or have other income that’s not subject to withholding, you may need to make estimated tax payments throughout the year. It’s important to make these payments on time to avoid penalties and interest charges.
- Work with the right tax professional: A good CPA can help you stay on top of your tax obligations and avoid any surprises. They can also help you take advantage of all deductions and credits for which you qualify.
By following these tips, physicians can avoid unpleasant surprises when it comes to federal taxes and stay on top of their tax obligations throughout the year. Early preparation and continuous communication are the keys.
The professionals at Sol Schwartz & Associates have been helping physicians for more than 40 years with:
- Tax Planning: We work with physicians to create a tax plan that considers their income, expenses, and other factors to ensure they pay the right amount of tax throughout the year and avoid underpayment penalties.
- Tax Compliance: We help physicians stay in compliance with federal tax laws and regulations, ensuring that they file all necessary forms and pay their taxes on time.
- Tax Consulting: We provide tax consulting services, which can help physicians identify tax-saving opportunities and minimize their tax liabilities.
- Representation: We can represent physicians before the IRS in the event of an audit or dispute, ensuring that their interests are protected and any issues are resolved in a timely and favorable manner.
Let us know if you would like us to take a look at your medical practice accounting situation. Contact us at 210.384.8000 or info@SSAcpa.com
Jim Rice, CPA, is a shareholder at Sol Schwartz & Associates and works with numerous San Antonio-area physicians, practice management professionals, business owners and families on a wide range of complex tax and accounting matters.