Filing Taxes as new PA

[WeBuyAndSellJunk]

This is my first year filing taxes as someone with an income above the poverty line (Yay!). The complexity all of the sudden seems through the roof though (i.e. salary, loan repayment from the state, school loan interest and payments, etc...). I am curious if anyone has words of wisdom? Should I fork out for someone else to file them? Should I try online programs (this has been my past option)? Any road blocks that I may be forgetting or things I should take advantage of? Thanks in advance!

[Boatswain2PA]

1:  Prepare yourself to see who is paying for all of the stupid government projects, the tax credits for illegal aliens, the medicaid for the meth heads on disability for the fibromyalgia, etc.  When you see how much you actually pay in taxes it can make you cry a little bit...

 

2. Unless you are a W-2 employee with no kids, no medical expenses, and you will be taking the standard deduction (ie: You can do the 1040EZ form)....then it is probably more cost effective to find a good accountant to do your taxes.  Even if you pay them the same rate that you are getting paid (let's say $65 an hour), they will be able to do it in 1/3 of the time.

3. Your accountant should also be able to give you advice on how to reduce your tax burden.  If they can't, then get a different accountant. 

 

Good luck, and get ready to bend over and grab your ankles.....

[Boatswain2PA]

Remember this (http://www.washingtontimes.com/news/2015/feb/11/irs-pay-back-refunds-illegal-immigrants-who-didnt-/) when you look at that line on your 1040 that says "total tax paid".

[SoCalPA]

^^^ May you never need one of those stupid government programs.

[gbrothers98]

You can do these taxes on your own.

Even if you itemize, turbotax spoonfeeds you through the process.

I like to do my taxes because I can make adjusting to withholding, etc for the next tax year. I could pay someone a couple hundred $$s but then I would have to drop everything off to them and wait.

I can do my taxes in about an hour with turbotax on the web.

While it may seem like accountants can do some magic for you, what they really can do is make suggestions on how to decrease your tax burden.

But most of those suggestions are readily found with a little bit of investigation.

Your student loan deductibility is dependent upon salary(s) and filing status. There is a good likelihood that your salary may make you ineligible unless you are married and your spouse does not work.

Loan repayment is either taxable or nontaxable. That would have been clarified when you accepted. Revisit those documents you signed.

The senior crewman is correct, you will start to enjoy that a lot of your money will go towards taxes and other programs.

You can get a breakdown here:

https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/

While I understand the frustration concerning supporting those whom cant due to some likely bogus reasons, personally I would rather be in my shoes than their's. So I guess it means I am paying.

Otherwise the usual way of avoiding taxes on your pay is to defer a percentage. Either 401k or 403b plan, IRA and/or HSA.

Next most common way is to buy a house, deduct mortgage interest and property taxes.

But you never truly avoid paying taxes, you (or your heirs) pay later or you just direct your money elsewhere.

I have owned 4 houses, enjoyed some capital gains along the way. I have also sunk a lot of money into houses because there is always something. But the wife and kids wouldnt be happy in a tent.

Here is a truly valid way to save your money.....dont spend it. Stop buying sh$t.

Welcome to adulthood.

G Brothers PA-C

[ventana]

 

2. Unless you are a W-2 employee with no kids, no medical expenses, and you will be taking the standard deduction (ie: You can do the 1040EZ form)....then it is probably more cost effective to find a good accountant to do your taxes.  Even if you pay them the same rate that you are getting paid (let's say $65 an hour), they will be able to do it in 1/3 of the time.

 

not sure this is good advice

 

1)if you have a house or other investments you might well be able to itemize

2)I have always done my own taxes - just purchase a tax program and follow it along if you are up to it (I have a business background but my taxes are far harder then the norm with numerous different types of investments)

3) I am seriously considering doing my own business taxes starting next year as the accounts are charging just shy of $800 for a sing corporate tax return and I feel like I am getting taken advantage of - but this is as a practice owner

4) you need to start doing investing with tax planning in mind - subscribe to some financial journals, tax an investing class - it is not rocket science

 

 

 

Investing 101

 

1) diversify - meaning have your investments in a few different things

2) indexed investment funds will just barely miss the markett (by the amount of their expense ratio) but that is actually better than something like 98% of the actively managed funds, so don't buy into the actively managed funds

3) expense ratio is the king of your long term return (keeping it as low as possible)    I prefer Vanguard index funds as they are some of the lowest expenses across the board

4) if you have access to a 40(k) or 403(b) you want to max out your contributions from day one.  If you have been living off peanuts as a student, putting away 10k of your 80k salary is easy, and this will allow you to retire at a young age if you do this your whole working adult life

5) NEVER take a withdraw from your 401(k) 403(b)

6) start a ROTH IRA NOW - and contribute the max to it every year - even if it hurts.

 

 

 

#4 and #6 - if you do these two items you will be a millionaire if not multi millionaire by the time you retire if you start in your early 20's and keep it up.  

[Planteater]

I've been doing my own taxes my whole adult life- we itemize our deductions, own a home, have kids and student loans, and have had some unique credits in the past. It's really not that complicated. I use the H&R block software. I've heard Taxcut is good too.

[CAAdmission]

^^^ May you never need one of those stupid government programs.

Most people with an ounce of drive and self-respect never will.

[SoCalPA]

Profound

[Boatswain2PA]

To the OP:  My advice may have been a little too strong with using an accountant.  My taxes are very complicated due to multiple businesses, investments, retirement, etc.  Like others have said, there are some good tax prep software out there that can take care of the normal/basic tax preparation.  However, if you get more and more complicated, the greater the need for an accountant. 

To Ventana:  I used to do my own taxes (before the days of inexpensive tax prep software) but it is no longer worth my time to do them, nor the stress of "what if I do something wrong".  I hate writing that $1000 check to my accountant, but I think it is worth it in the long haul.  Plus, she helps me fix my mistakes in quickbooks!

 

To SoCal:  Nobody is suggesting we get rid of our social safety net.  However we don't want the safety net to be a hammock slung between two coconut trees.  It is reprehensible that our tax money will be given away to illegal immigrants as refundable tax credits.  If you don't agree with that, then there is no hope for a discussion here....

[SoCalPA]

Actually I read right through the "alien" comment. What struck me was this comment

 

1: the medicaid for the meth heads on disability for the fibromyalgia, etc.

Made me consider how to differentiate between those in need of a safety net and those bonafide "meth heads". Caused me to wonder whether one group ever gets lumped in with or mistaken for the other. Also, I considered whether those in need of govt assistance think the money that they've paid in taxes was a waste. Then I thought of how it must feel to be in that position. I hope that as I continue on my journey in healthcare that I don't lose my sense of empathy and compassion. That's was my line of thinking. That is all.

[Boatswain2PA]

Nice post,

As to the protecting your empathy and compassion for your patients (even the meth heads on disability for their fibromyalgia)...it's called compartmentalization.  I detest the wasteful use of federal tax money, however I will work hard to get that meth head on disability for fibromyalgia into a medicaid covered rehab clinic after treating her for IVDA associated endocarditis.  Yes, I am a hypocrit.

 

Peace, and good luck in school!

[JohnnyM2]

You just have to decide if you want to do a little work. My taxes are very complex with multiple 1099s, lots of investments, several businesses, etc. My experience is that, for personal taxes, you will do as much or more work getting all your info to your accountant and then spend a bunch of money getting them to fill out your tax forms. I can do everything with TurboTax and have been doing it for years. For my business, I do use a tax preparer because it decreases the chance of getting audited which can be time consuming and expensive, but I give them a balance sheet, income statement and general ledger produced by my accounting program.

 

As a new PA, it is unlikely that you need an accountant, even if you are itemizing, have some investments, etc. But if you aren't comfortable, I suggest the following: Pay a tax preparer this year but before you get your taxes back, do them yourself on TurboTax or another program and compare the results.

 

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[greenmood]

This is the first full year I've worked full time as a PA. My husband has a lower-income job. We bought a house and had a child this year.

 

I almost cried when I saw that for the first time in my life, I OWE taxes.

 

Seriously, this sucks.

 

ETA, we use turbotax. It was easy. I'm still working through the five stages, but it was easy to fill out.

 

 

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[EMEDPA]

 I'm still working through the five stages, but it was easy to fill out.

denial, anger, bargaining, depression, acceptance?

Have not started my taxes yet , but should be fun as I purchased a condo near one of my per diem jobs this year to be used only for work...trying to figure out what to write off. I previously wrote off hotel and food in the same town( it's >100 miles from home). now I guess I can write off mortgage, utilities, HOA fees, etc.

I don't rent it or earn income from it and don't use it as a vacation home. It was actually cheaper for me to do this for 1 week/mo than pay hotels, etc AND I am building equity.

[CorpsmanUP]

One option would be to claim it as your office and primary place of employment (for your 1099 income) then claim all mileage from that location to other locations. That would allow all expenses related to the condo as a business expense. Are you filing as a PLLC or S corp for your 1099 income E?

 

*the required caveat that this should not be considered tax advice and is simply a hypothetical consideration.

[EMEDPA]

Are you filing as a PLLC or S corp for your 1099 income E?

 

 

neither. I am a part time employee. they give me salary + malpractice + pay my state license. I have a similar arrangement at another place in addition to my full time job.

[CorpsmanUP]

hmmm, you may be limited on how you can handle the deduction for the condo then. Unless they have you listed as a statutory employee at one of the locations there are a lot fewer deductions you can take advantage of and the IRS will look at a large home office deduction closely. From reading your posts through the years, you pick up a lot of extra shifts. You may want to consider talking to an advisor if it would be worth the effort to renegotiate contracts as a 1099; specifically for the deduction allowances, tax advantages of dividend disbusement vs income taxes, and the increased retirment account thresh-holds.

[JohnnyM2]

This is the first full year I've worked full time as a PA. My husband has a lower-income job. We bought a house and had a child this year.I almost cried when I saw that for the first time in my life, I OWE taxes.Seriously, this sucks.ETA, we use turbotax. It was easy. I'm still working through the five stages, but it was easy to fill out.Sent from my iPad using Tapatalk

Ah, that transformative moment in a young person's life when they first learn that the hard work they do to make a living and support their family does not actually belong to them. It is the role of every level of government to concoct all manner of confiscatory taxes and fees on every conceivable form of human activity to create a bloated budget that can be spent by politicians to bribe voters with their own money to re-elect that same government. A lesson that is never learned. Welcome to the club.

 

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[Boatswain2PA]

hmmm, you may be limited on how you can handle the deduction for the condo then. Unless they have you listed as a statutory employee at one of the locations there are a lot fewer deductions you can take advantage of and the IRS will look at a large home office deduction closely. From reading your posts through the years, you pick up a lot of extra shifts. You may want to consider talking to an advisor if it would be worth the effort to renegotiate contracts as a 1099; specifically for the deduction allowances, tax advantages of dividend disbusement vs income taxes, and the increased retirment account thresh-holds.

 

E - What corpsman said....I would be very, very careful doing what you are doing.  I am certainly not a tax expert (nobody is), my understanding is if you're a W-2 employee then you are not entitled to mileage and temporary lodging deductions. 

[EMEDPA]

E - What corpsman said....I would be very, very careful doing what you are doing.  I am certainly not a tax expert (nobody is), my understanding is if you're a W-2 employee then you are not entitled to mileage and temporary lodging deductions. 

My understanding is that if I travel more than 50 miles from home to work at a place that is not my primary job then all my expenses are deductible. There are actually very few per diem positions for PAs on the west coast that are 1099.  all my per diem and part time jobs over the last 20 yrs have always had me as an employee getting a w2, even if I only worked 6 shifts/yr.

[gbrothers98]

This is the first full year I've worked full time as a PA. My husband has a lower-income job. We bought a house and had a child this year. I almost cried when I saw that for the first time in my life, I OWE taxes. Seriously, this sucks. ETA, we use turbotax. It was easy. I'm still working through the five stages, but it was easy to fill out. Sent from my iPad using Tapatalk

You may actually benefit from some tax advice.

If there is a significant disparity in your income and spouse's, you may actually benefit from filing separate but married.

If you have already filed, you can refile. Happens all the time.

Dont forget that the child is your new tax write off in many forms.

This year you will be able to write off your property taxes and your mortgage interest plus any points you paid on your mortgage.

Look at you deductions on your W2. You should likely declare just one. Maybe your husband can declare 2.

Last, are either you or your husband saving any pretax monies in retirement savings? 

My philosophy is that if you are not maxing out your pretax savings and still owe money at tax time, that money you have to pay, you can afford to put the similar amount into pretax retirement.

But everyone's tax situation is different. While I use turbotax and do my own, I have a pretty good handle on what my situation is and it is rather static right now. Your situation has changed dramatically tax wise, ie child, new home, income gap amongst you and your husband.

One last thing to consider. If you are paying for daycare, you can deduct this cost based upon AGI limits. Sometimes when you run the numbers it actually makes sense to not pay daycare and have spouse stay home. I have multiple colleagues whom have made that decision because their spouses could not find anything highpaying enough to make up that daycare cost, especially if you start talking about more than one child.

Good Luck.

GB PA-C

[loliz]

My understanding is that if I travel more than 50 miles from home to work at a place that is not my primary job then all my expenses are deductible. There are actually very few per diem positions for PAs on the west coast that are 1099.  all my per diem and part time jobs over the last 20 yrs have always had me as an employee getting a w2, even if I only worked 6 shifts/yr.

Be careful here... otherwise wouldn't we all get a per diem job somewhere nice to visit and make the trips tax deductible? ;) 

I was curious so a quick google search found this...

http://www.irs.gov/taxtopics/tc511.html

[CorpsmanUP]

The above reference as well as the one below highlight the issues. You are technically not traveling for work; you are commuting to three different jobs, and commuting is not deductible. If it was one job with three different locations it would be fine as a business expense. As a 1099 your home office becomes your primary place of business, and the travel to other locations constitute travel to other business locations, and hence why it is deductible.

 

http://www.irs.gov/publications/p463/ch04.html

[Boatswain2PA]

This is my understanding as well. 

 

The only W-2 jobs I have had were close-to-home jobs.  I've turned down PRN jobs that required a lengthy commute because they, for some stupid reason, were adamant that I be a W-2 employee vice a 1099.  It wouldn't have been worth it if I didn't get the tax write-offs for travel.