The April 15 Tax Deadline is Close! Last Minute Reminders for Practice Owners

The April tax Deadline is near. Advice for Physicians

Wondering how the U.S. tax changes will affect your practice? We’re here to shed some light. President Donald Trump signed off on the Tax Cuts and Jobs Act in 2017. And this Act contains significant changes to the U.S. tax code; changes that haven’t been experienced in the U.S tax system for decades.

But what does this mean for your practice? Most of the changes only came into effect in 2018. This means these changes are incorporated in the return your practice has to file with the IRS this year. We’ll quickly explain a few aspects of the tax act. Thereafter we’ll outline how exactly it’ll affect your practice.

Business Tax Rate

We’ll start by pointing out that this Act favors businesses more than it does individuals. How? The maximum corporate tax rate was cut from 35% to 21%. In fact, this is the lowest it’s been since 1939.

Business Deductions

Below are the deductions you need to keep in mind:

  • According to the Act, it offers a 20% standard reduction on qualified income. But here’s the catch; this only applies to pass through businesses. If your practice is either a sole proprietorship or a partnership, then you’ll benefit from this ruling.
  • It’s important to note that the deductions will apply to professionals in the service industry—physicians included—if your income reaches $157 500 for single filers. If you’re joint filers then deductions will phase out when you reach $315 000.
  • The Act limits the ability of your practice to deduct interest expenses to 30% of the practice’s income. In this case, income for the first four years will be based on your earnings before interest, tax, depreciation, and amortization. What does this mean for your practice? It means this limit allows your medical practice to generate revenue to pay for the other tax breaks.
  • According to the tax changes, your practice is allowed to deduct the cost of depreciable equipment per year as opposed to amortizing them over a number of years. But note that to qualify for this, the equipment must have been purchased after September 2017.

Other Changes to Corporate Tax

You’ll be happy to know that corporate alternative minimum tax (AMT) is entirely eliminated. Previously corporate AMT had a 20% rate that came into play if tax credits pushed your practice’s firm rate to below 20%.

This, unfortunately, meant that your practice couldn’t deduct funds spent on research and development.

How Do These Changes Affect Your Practice?

As mentioned earlier, these changes benefit businesses more than individuals because the tax cuts are permanent. As a result, your practice will have more disposable income to finance its operations. This means as a practice you’ll be in a better position to:

  • Increase wages
  • Pay bonuses
  • Improve infrastructure
  • Purchase new equipment
  • Increase benefits
  • Award dividends
  • Open new branches

To capture these changes effectively, it’s necessary to invest in good tax software. It’s no secret how daunting it is to compile your tax returns. But the process can be made much easier and quicker if you use the right software.

That’s why we took the liberty to outline some of the best online tax software options you can consider for your practice. Find one that’ll meet your needs as a practice and help make filing your taxes less cumbersome.

Best Online Tax Software Options in 2019

H&R Block Deluxe 2019

One of the major advantages of using this tax software system is that it’s very easy to use. Thanks to this comprehensive system, you’re able to claim the relevant deductions and credits. You’ll appreciate that it offers a wide range of help options in case you get stuck during the tax return process.

Below are the system’s major selling points that your practice is likely to find useful:

  • It includes a number of in-office services
  • DIY software
  • Online applications

All the above factors have made it one of the best online tax software options on the market.

Intuit TurboTax Deluxe 2019

This is the software to pick if you’re looking for a system that’ll provide you with all the tax forms and schedules you need to get the job done. And it’s ideally suited for both new and return taxpayers.

Some of the advantages associated with this system include:

  • It uses a familiar tax format that you’ll find very easy to use
  • It’s designed to save you time
  • It significantly reduces errors that may prove to be costly
  • The tax return procedure is conducted in a systematic and logical manner

This system has been in operation for the last 25 years and many firms have grown to trust it for efficient tax returns. The only major drawbacks to picking this system are that it’s rather pricy and it also doesn’t offer much help support systems.

FreeTaxUSA Deluxe 2019

If your practice is starting out or you’re working on a budget then the FreeTaxUSA is the software to pick. Here’s why: it allows you to e-file your tax returns for free. And that’s its major drawcard as the name suggests.

But note that there are minimal fees if you pay for state filing( ($12.95) or if you require advanced support options ($6.99).

What you’ll appreciate about this system is that:

  • The software supports all major tax forms & schedules
  • Not only is it fast, but easy to use
  • The systems offer easy accessibility regarding any tax information you may need clarity on

The user interface isn’t the most elegant on the market—compared to the other two systems reviewed above. But overall, it does get the job done at a fraction of the cost.

Final Words

By picking any of the above-mentioned systems, compiling your practice’s tax returns need not be a nightmare anymore. And considering how this year’s Act changed in your favor, we’re certain it’s a task you’ll do with pleasure.

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