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Posted on 11/14/13 at 12:59 pm to Broke
Forming an LLC when you are an employee receiving a W-2 is pointless for trying to gain some sort of tax benefit. The W-2 earnings must be reported on Line 1 of Form 1040 as salary or wages. You could attempt to claim expenses on Sch. C, but what revenue are you going to report that will enable you to show a profit? You must show a profit from your trade or business at some point or the activity will be treated as a hobby and the losses will be disallowed. You will be assessed penalties, possibly including accuracy penalties, and interest for the under-reporting and late payment of tax. If you falsely report revenue to create a profit for the trade or business you open yourself to fraud penalties and possible criminal punishment.
Posted on 11/14/13 at 2:04 pm to Poodlebrain
I thought he was a contracted employee? Are we now saying he isn't? Because that makes a HUGE difference.
Posted on 11/14/13 at 3:47 pm to Dale Murphy
1. There is no need to get with a financial planner at this time.
2. Don't build a dream house right off the bat. Give yourself 36 months to feel things out a bit.
3. Max out 401k and Roth IRAs for a while.
4. Stay away from investments like horses, boats, tax credits, time shares, bacation condos, aports cars, recreational real estate, etc.
5. Find a good CPA first....then an investment guy.
6. Your net is too high - way too high.
7. Don't bang nurses on the side or get a girlfriend. Only have sex with the wife. This will save you hundreds of thousands of dollars.
2. Don't build a dream house right off the bat. Give yourself 36 months to feel things out a bit.
3. Max out 401k and Roth IRAs for a while.
4. Stay away from investments like horses, boats, tax credits, time shares, bacation condos, aports cars, recreational real estate, etc.
5. Find a good CPA first....then an investment guy.
6. Your net is too high - way too high.
7. Don't bang nurses on the side or get a girlfriend. Only have sex with the wife. This will save you hundreds of thousands of dollars.
This post was edited on 11/14/13 at 3:49 pm
Posted on 11/15/13 at 9:37 am to Broke
quote:Common misunderstanding. Employee v. contractor status is determined for tax purposes based on three major factors, behavioral control, financial control and the relationship of the parties. Here is some basic guidance the IRS provides on the subject that is indicative of how they approach these types of situations. LINK
I thought he was a contracted employee? Are we now saying he isn't? Because that makes a HUGE difference.
The IRS almost always wins when there are disputes on this issue no matter which side they choose.
Posted on 11/15/13 at 9:49 am to Broke
quote:
He's a snatch doctor.
ETA: I have no idea what he really does. I just like typing snatch doctor.
I almost spit out my coffee
Posted on 11/15/13 at 11:30 am to Poodlebrain
quote:
You must show a profit from your trade or business at some point or the activity will be treated as a hobby and the losses will be disallowed.
This is not strictly true, Poodlebrain - don't you only have to have an intention to generate a profit? They still have the option to disallow if they don't believe it, but I don't think a realized profit is absolutely essential.
Maybe I'm reading the regs incorrectly?
Posted on 11/15/13 at 11:36 am to nelatf
quote:I am a CPA, and I disagree with this advice. Financial planning is similar to using a travel agent. You tell the travel agent where you want to go, when you want to get there, what your resources are, and any landmarks you would like to see on the way to your destination. The travel agent develops suggested itineraries that eliminate the useless and provide realistic options for achieving your goals. The travel agent knows you may will need assistance along the way and recommends tour guides, and other experts, to help you navigate your way to landmarks, or around obstacles, when their specific knowledge might be beneficial.
There is no need to get with a financial planner at this time.
He could definitely benefit from consulting with someone in the general travel agent role, but he likely doesn't require the tour guide type specific expert just yet.
Posted on 11/15/13 at 1:57 pm to Poodlebrain
I think a good CPA is a better asset than the best financial advisor.
IMHO he should hunt down the best CPA he can find and go from there.
IMHO he should hunt down the best CPA he can find and go from there.
Posted on 11/15/13 at 2:49 pm to nelatf
quote:
I think a good CPA is a better asset than the best financial advisor.
I think they worst best as a team. A good CPA/Financial planner team is worth having on your side.
Posted on 11/15/13 at 3:23 pm to Broke
quote:I agree. As a CPA I can tell you what return on investment you require to achieve your objective, but I do not have the expertise to advise you what investments you should make to get the necessary return. There are CPAs out there who believe they have the expertise to advise on investments, but I have a hard enough time maintaining competence with our complex tax systems.
I think they worst best as a team. A good CPA/Financial planner team is worth having on your side.
Posted on 11/16/13 at 7:23 am to Dale Murphy
My advice to you is to find the best financial planner and CPA and sit down to discuss your unique situation.
I spent 3 years in residency and 3 additional years in fellowship as well. When I got out I was ready to buy a house and move on with life. My advisor showed me mathematically that it was the wrong move and I listened and rented a nice place. That alone saved me 80,000 due to the market.
You are about to make more money that you have ever seen but you are behind in savings as you have lost 10 years of compound interest. It will not be as much as you have dreamed with taxes and expenses. ALWAYS live beneath your means and you will get ahead. Good luck and welcome to the finish line….
I spent 3 years in residency and 3 additional years in fellowship as well. When I got out I was ready to buy a house and move on with life. My advisor showed me mathematically that it was the wrong move and I listened and rented a nice place. That alone saved me 80,000 due to the market.
You are about to make more money that you have ever seen but you are behind in savings as you have lost 10 years of compound interest. It will not be as much as you have dreamed with taxes and expenses. ALWAYS live beneath your means and you will get ahead. Good luck and welcome to the finish line….
Posted on 11/16/13 at 9:55 am to lsusaintsfan4life
quote:He has reached one finish line, but that just qualified him for the next race. And he is only in the starting gate for that race.
Good luck and welcome to the finish line….
Thanks for adding your personal experiences that reinforce what the professionals have been saying. When we say it, it can come across as self-serving.
Posted on 11/16/13 at 10:09 am to Dale Murphy
quote:
I'm basically planning on staying in my rental for another year+ to save up a 20% down payment and then build my "dream house".
I would not go right for the "dream house"
My brother in law did that and regrets it.
Posted on 11/16/13 at 12:51 pm to Poodlebrain
I couldn't agree with Poodle more. The OP is about to start on his financial life and can make mistakes that will set his family back if not careful. It's hard to delay gratification forever but it's the best way to secure the future.
We physicians are good at what we do but should seek professional help regarding finances. Don't be scared to pay for the best out there. It will return bigger dividends later.
We physicians are good at what we do but should seek professional help regarding finances. Don't be scared to pay for the best out there. It will return bigger dividends later.
Posted on 11/16/13 at 1:40 pm to lsusaintsfan4life
This will sound counterintuitive, but keep in mind that your income will provide you with a unique opportunity to be fairly conservative financially and still live comfortably.
Get in the habit of pulling your savings automatically out of each paycheck and going into a separate account. Pay off your student loans as quickly as possible before you get used to the new income.
Don't worry about the latest great stock tip, oil well, time share, etc (doctors are easy marks, sorry). A financial planner with some simple mutual funds should suffice, and don't get talked into funds with front-end or back-end loans. If you enjoy managing your own finances and investments then great, but with 4 kids you should let somebody else do that, tell them to keep it simple, and monitor their performance.
And like somebody mentioned before, take good care of your wife and stay away from the hot nurses. Divorce is a big financial pitfall.
Congrats and best of luck in your career!
Get in the habit of pulling your savings automatically out of each paycheck and going into a separate account. Pay off your student loans as quickly as possible before you get used to the new income.
Don't worry about the latest great stock tip, oil well, time share, etc (doctors are easy marks, sorry). A financial planner with some simple mutual funds should suffice, and don't get talked into funds with front-end or back-end loans. If you enjoy managing your own finances and investments then great, but with 4 kids you should let somebody else do that, tell them to keep it simple, and monitor their performance.
And like somebody mentioned before, take good care of your wife and stay away from the hot nurses. Divorce is a big financial pitfall.
Congrats and best of luck in your career!
Posted on 11/17/13 at 11:57 am to JonTheTigerFan
quote:
My health insurance is $296 per month and dental is $70. I have the same amount if dependents also.
Wow I pay 483.32 a month for just me and my wife through work for health and dental. Our plans are pretty good but damn... I don't even have kids yet.
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