University of Missouri Medical School February 16 th, 2011 Presented By: Evan McGinnis Financial...
-
Upload
jerome-grennan -
Category
Documents
-
view
218 -
download
2
Transcript of University of Missouri Medical School February 16 th, 2011 Presented By: Evan McGinnis Financial...
Tax Strategies 101University of Missouri Medical School
February 16th, 2011
Presented By:Evan McGinnis Financial Advisor
And James Pommert Financial AdvisorSecurities and investment advisory services through Securian Financial Services, Inc.,Member FINRA/SIPC. Renaissance
Financial is independently owned and operated. 5700 Oakland Ave. Suite 400 St. Louis, MO 63110
Key Tax Strategy Overview1) Tax Basics2) Deductions vs. Credits
Student Loans Education Credits
3) IRA vs. Roth IRA Tax advantages and disadvantages
4) Tax Strategy Know the Law Know Your Limits
5) Legal Strategies6) 1040 Example7) Advanced Tax Strategies
Deductions vs. CreditsWhat is the real difference????Example A: $1,000 Deduction
Example B: $1,000 Credit
1. Individuals taxable income from employment is $100,000.
2. They would be in the 28% tax bracket
3. For every $1,000 they deduct they will pay $280 less in taxes.
1. Individuals taxable income from employment is $100,000.
2. They are also in the 28% tax bracket
3. They receive a credit for $1,000.4. Instead of paying $280 less in
taxes they will actually pay $1,000 less in taxes.
Deductions vs. CreditsDeductions Credits
Student Loan InterestMortgage InterestIndividual ($5,700)
Joint ($11,400)Charity
Health Insurance PremiumsState Taxes
Personal Property TaxesSavings for College
IRA
EducationAdoption
Child CareDependent Care
Earned Income Tax
IRA vs. Roth IRAIRA Roth IRA Works the same way as a 401k Money is deducted from your taxable
income Invested in the market and you pay
taxes when you withdraw money. Magic age is 59 ½ with no penalty
Opposite of a IRA Money is paid in after it is taxed. The money is invested in the market
and you never pay taxes on it again. As long as you also wait until the
Magic age of 59 ½ In addition you always have access to
the original money put in without tax burden or penalties.
Tax StrategiesDisability Insurance
Employer PaidDisability Insurance
Personal Policy
1) Taxable Benefits2) Non-Portable3) More Restrictive Definition of
Disability
1) You Own and You Pay2) Tax Free Income Benefits3) Portable4) Better Riders Such as:
Future Income Purchase Options Own Occupation Rider Residual Disability
Tax StrategiesKnow the Law
Capital Gains Income Dividends Change from Year to Year (ex. C-corp)
Know Your Limits Contributions to 401k (maximum is $16,500) Income Limits:
IRA ($56,00 single filers, $89,000 for joint filers) with a max contribution of $5,000
Roth IRA ($106,000 single filers, $167,000 for joint filers) with a contribution max of $5,000
Financial advisors do not provide specific tax strategies. This information should not be considered specific tax strategies. You should consult your tax advisor for your own specific tax situation.
Legal StrategiesTrustsNeed a legal perspective on ways to save taxes.All of an individuals assets are included in an
estate.By establishing trusts individuals can minimize
the amount of taxes their heirs must pay
Financial Advisors do not provide legal advice. This information should not be considered as specific legal advice. You should contact your legal advisor for your own specific legal situation.
Debt Management Tax ImplicationsGood Debt vs. Bad DebtGood Rate vs. Bad Rate
Example:May be more beneficial to buy a house then to
rent. You can deduct your interest paid on the mortgage, reducing your taxable income and putting more money in your pocket.
234238 DOFU: 9/2010
ExampleMalpractice insurance
Scenario:6 neurosurgeons in FloridaEach pays $75,000/annual premium for
$600,000 in coverage. $450,o00 total for practice
Advanced Tax Concepts: Captive Insurance Companies
Establish a CaptiveSpecific risk is underwrittenTax deductible contributions
reduces the taxes you pay each yearCash builds in captive for physicians
Cash is invested and grows Can be used to pay for future premiums Distributed at capital gains rates not income rates
15% vs. 35%?
Advanced Tax Concepts: Captive Insurance Companies
Qualified Personal Residence TrustAffluent physicians that own property
Primary Residence Lake/Ocean/City homes & condos Any Vacation
Tax saving strategy for a physician's heirsTransfers assets to the next generation in a tax
efficient manner
Advanced Tax Concepts: QPRT
QPRT’s: Scenario OnePhysician does not establish a QPRT and
passes 20 years from nowCurrent value of $1 million3% annual appreciation of the propertyWorth over $1.8 million at TOD!
$1.8 million enters into estate and is fully taxable2011 – 35%$630,000 tax bill
Physician establishes a QPRT and passes 20 years from nowDeed the home into the QPRTRetain the right to live in home for 15 yearsGift the right to the home after 15 years
Value of gift is PV of $1 million in 15 years at 4.6%*= $509,000
Property appreciates 3% annually = $1.8 million
$1.8 million not taxable at deathHeirs save approximately $630,000
QPRT’s: Scenario Two