Time for Year-End Tax Planning
The window for cutting taxes on your medical practice’s 2007 income is
closing soon. Most income tax strategies are available only through
year-end. Starting to plan now can pay off nicely at tax filing time next
year. Here are some tax-smart moves to consider.
Buy Equipment and Software
A tax provision known as the Section 179 deduction now allows you to elect
the immediate deduction of up to $125,000 (the deduction phases out dollar
for dollar after equipment purchases exceed $500,000) of business equipment,
including off-the-shelf software, that was bought and used during 2007. So,
this is a possible strategy to employ if you have an equipment need and are
looking to offset 2007 income.
Shift Year-End Spending and Income
If your practice uses the cash method of accounting for tax purposes, look
at the timing of year-end payments and income to better coordinate the tax
impact. You can increase 2007 deductions by paying expenses in December
instead of January, and reduce 2007 income by delaying receipts until 2008.
For example, pay bonuses in late December instead of January, and delay
transmitting claims that would ordinarily be paid in December until early
January. Expenses paid by credit card are deductible in 2007, even if you
don’t pay the bill until 2008. Similarly, an expense paid by check in 2007
is generally deductible in 2007 even when the check isn’t negotiated until
2008.
Maximize Retirement Plan Contributions
Plan to contribute the maximum amount allowed for this year—if affordable—to your tax-deductible (and deferred) retirement plan. No plan yet? We
can help you review the options available to your practice.
Tax planning can help you minimize your tax obligation for 2007. Please
contact your Somerset advisor or any member of our
Health Care Team while the planning window remains open. For
more year-end tax planning ideas, go to our full
2007 Year-End Tax Letter.
Health Care Commentaries is
provided by Somerset’s
Health Care Team
for our clients and other interested persons upon request. Since
technical information is presented in generalized fashion, no final
conclusion on these topics should be made without further review. For
additional information on the issues discussed, please contact a member
of our Health Care Team. This
document is not intended or written to be used, and cannot be used, for
the purpose of avoiding tax penalties that may be imposed on the
taxpayer.
Somerset CPAs,
P.C.
3925 River Crossing Parkway, Third Floor
Indianapolis, Indiana 46240
317.472.2200 • 800.469.7206 • FAX 317.208.1200
www.somersetcpas.com
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