By Jeremy L. Stanley, CFP®, AIF®
Tax season has officially started, which often provokes groans and phone calls to your CPA. As a CRNA, you hopefully have a tax minimization strategy in place to help you legally reduce your overall tax liability. However, beyond your year-round strategies, make sure you familiarize yourself with tax deductions for which you may qualify when it comes time to file your return.
There are several tax breaks available if you’re a self-employed freelance CRNA or small business owner. Knowing what write-offs you can claim may help you save more. Here’s a look at a few tax deductions you may be able to claim.
1. Retirement Plan Contributions
As a CRNA business owner, you have a number of options for retirement planning, including opening an IRA, starting a Uni-K plan and/or solo 401(k) plan, or setting up a defined benefit plan. Not only does this help you save for retirement, but you can also save tax dollars. The money you contribute into your retirement account in 2016 won’t be taxed, reducing your total taxable income.
Hopefully, you contribute the maximum into your retirement accounts. For a 401(k), you can contribute up to $18,000 per year (or $24,000 if you’re age 50 or older) as an employee, plus you can put in up to 25% of your business earnings for a total combined contribution of up to $54,000, or $60,000 if you’re age 50 or older. For a traditional IRA, you can contribute up to $5,500 per year (or $6,500 per year if you’re age 50 or older), and for a SEP IRA, you can contribute up to 25% of your net earnings (for a max of $54,000).
2. Mileage Deduction
Did you ever have to drive your car for business purposes? While you can’t deduct your daily commute to your permanent work location, you may be able to deduct mileage costs if you had to travel for work, such as to a conference or to meet with a hospital or medical group. In order to deduct your expenses, you’ll have to have kept records of the distances per trip and the dates of travel. The simplest way to claim this deduction is to use the IRS’ standard mileage rate, which for 2017 is $0.535 per mile.
3. Education Credits
In 2016, did you complete your master’s, return to school to get your doctorate degree, or attend continuing education courses? If so, you may be eligible for education credits, which were created to help offset higher education costs for yourself or eligible dependents.
There are two primary education credits currently available. The first is the Lifetime Learning Credit. For this credit, up to $2,000 may be deducted for each eligible student for higher education expenses such as tuition and fees, books required to complete the courses, and relevant supplies and equipment. The credit is eligible for couples married filing a joint return with a modified adjusted gross incomes of $120,000 or less. While many seasoned CRNAs may be over the income limit, newer CRNAs may be eligible for this credit.
There’s also the American Opportunity Credit. For this, up to $2,500 per eligible student may be deducted for up to four years of postsecondary education. Each eligible student must be pursuing an approved credential. Full credit is available to married couples filing a joint return with a modified adjusted gross incomes of $160,000 or less.
4. Business Equipment and Home Office Deduction
If you had to purchase equipment to do your job, from a computer to office supplies and licensing fees, you can take a deduction for up to $500,000 of expenses. If at any time you have to work out of your home, whether to search for new freelancing opportunities or schedule appointments, you can also claim a home office deduction.
To qualify, the space will need to be solely used for business purposes, such as an office. Your deduction will be based on the space of your home office, the total size of your home, and your total yearly costs.
5. Health Insurance Deduction
As a self-employed CRNA, you likely pay for your own health insurance premiums. If so, you can claim a deduction. However, this deduction is only available if you did not have the option to take advantage of an employer-sponsored plan. If you also pay the premiums for your spouse and dependents, you can deduct those expenses, as well.
The Tax Cycle
While no one looks forward to Uncle Sam’s visit each year, paying taxes and filing your return are annual necessities. By working year-round with your advisor to maintain a tax minimization strategy, working with a qualified tax professional to file your taxes, and understanding deductions you’re eligible for as a business owner, you can legally mitigate your tax bill and save more for retirement.
At CRNA Financial Planning®, we can help you evaluate your investments and financial plan and determine appropriate tax minimization strategies to help you save more of your hard earned money. To learn more, call our office at 855.304.3748 or email inquiry@crnafinancialplanning.com.
About Jeremy Stanley
Jeremy Stanley is the founder of CRNA Financial Planning®. He has been providing advice and guidance for Certified Registered Nurse Anesthetists (CRNA) for over two decades. As a CERTIFIED FINANCIAL PLANNER™, Jeremy has met rigorous certification and professional standards set by the CFP® Board. He is committed to adhering to the principles of integrity, objectivity, competence, fairness, confidentiality, professionalism and diligence when dealing with clients.
Jeremy is also the author of The Wealthy CRNA and A CRNA’s Life After Anesthesia. The Wealthy CRNA features insights into becoming a financially successful CRNA and how to start planning for your financial future, and has been prior approved for up to 4 Class A CE credits by the AANA. A CRNA’s Life After Anesthesia serves as your financial roadmap for a smooth emergence into retirement. It reviews recent changes in the CRNA industry along with the new rules of retirement and the final steps of legacy planning. This book has been prior approved by the AANA for up to 2 Class A CE credits.
Jeremy Stanley is a financial professional with and Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and CRNA Financial Planning® are separate entities from LPL Financial.
The opinions voiced in this material are for general information only and are not intended to provide specific financial or tax advice or recommendations for any individual.
