Your Tax Fears
By: Emil J. Belvin,
After I graduated as a Certified Respiratory Therapist, I couldn’t wait to go to work. Even before I graduated, I remember checking out local job fairs trying to find out who would hire me as a student RT. I did my homework to find out which employers were paying top dollar and figured that was a good place to start. One of the last things on my mind at the time was income taxes and tax deductions. Inevitably, I had to face the task of dealing with my taxes and I was lost. I can still recall that first year of filing my taxes because I was so disappointed. After assuming I would get back thousands of dollars, I barely received a tax refund. It was at that moment I wanted to empower myself for years to come, so I began to read and learn about taxes as they pertained to healthcare professionals. I had no idea that it would lead me to owning my own tax practice which allows me to help educate others.
STEP 1: Where to Start
From the time we start working until we file our first income tax return, most of us have no idea where to start as it pertains to our taxes. I’d like to suggest that you start with the W4 form. This is the form that we get from our employer when first getting hired. It helps payroll determine how much federal and state tax to withhold from our paycheck. Even though filling this form out is a fairly simply task, it has huge consequences if filled out incorrectly. I’ve seen clients fill this form out incorrectly and it’s cost them big. I recommend that if you’ve never filled out a W4 form, work more than one job or work as an independent contractor, consult with a tax professional.
STEP 2: Keep Good Tax Records
When it comes to taxes, it’s quite similar to medical charting because good record keeping is imperative. I tend to notice that clients who keep track of their spending often increase their refunds by several hundred dollars more when compared to those who don’t keep good records. Keeping good tax records simply means keeping up with what you spend money on. One way to facilitate keeping track of what you spend money on is to use a check card or credit card for purchases. A card of some type is preferred because it creates a paper trail. When we spend cash we often don’t get receipts, so there is usually no way to go back and validate our purchases. I’m frequently asked, “Should I keep my receipts?” Yes, I recommend that you do and for back up you have your statements for all purchases you made using that card.
STEP 3: Know Your Deductions
The problem with keeping receipts is that it oftentimes gets too messy. That’s why it’s important to know which receipts to keep. Once you know which receipts to hold on to it’s okay to discard the irrelevant ones. As a tax professional I’m often asked, “What can I write off or what receipts should I keep throughout the year?” These are good questions because knowing which receipts are relevant helps us keep good tax records and can ultimately increase our refund. I won’t go into elaborate detail of everything that you can write off, but I will share a few of the common unreimbursed employee expenses (tax deductions) for healthcare professionals: uniforms, uniform cleaning, malpractice insurance, business cards, job education, medical equipment and union dues just to name a few. For more information on tax deductions for healthcare professionals call our office for a free brochure.
CONCLUSION: Tie it all Together
If you fill out the W4 form correctly, keep records of all relevant purchases and know your deductions, you’ll be more prepared the next time you file your taxes. Something I want you to remember while preparing to file your taxes is that the tax year is all year long. This means you should be thinking about your taxes Jan 1st through Dec 31st and not only when it’s time to file. Even though you won’t file your tax return until the following year, what you do throughout the year will determine your tax fate. Once the tax year is over there is very little to do, so planning throughout the year will help to ease your tax fears. EZX co. would love to help you with your tax planning. Contact us for an appointment.
Emil J. Belvin is the founder of EZXco., a Los Angeles-based tax service company, which specializes in taxes and financial services for healthcare professionals. For more information on tax strategies for healthcare professionals, please call 310.670.3002 .