Archives for January 2019

Uncovering the Secrets of Cost Segregation

Even the most savvy investors and tax experts often avoid the topic of cost segregation. It’s complicated, and a careful reading of tax code doesn’t do much to clear things up. Most IRS-approved applications of cost segregation were developed through individual rulings, rather than written into tax regulations, making it a challenge to get a complete listing of the requirements. However, with a little help from your Certified Tax Coach, you can master this method of depreciation and bring your total tax liability down. They share their secrets in the Amazon Best Selling book, The Great Tax Escape.

The Basics of Cost Segregation

If you don’t know much about cost segregation, you aren’t alone. It is a tax strategy that most real estate investors pass up altogether – but you don’t have to be one of them. At its most basic, cost segregation is another way to look at asset depreciation. As you probably already know, you can depreciate the value of improvements on your property over time. For example, non-residential buildings depreciate over 39 years – their estimated useful life. Residential buildings depreciate over 27.5 years. Of course, the longer the period of depreciation, the less impact this deduction has on your current tax liability.

Cost segregation separates each element of your property, so that you can depreciate certain components over a shorter period. For example, personal property and land improvements can be depreciated over periods that range from five to fifteen years, which has a substantial impact on your tax bill.

Getting Started with Cost Segregation

It is a common misperception that the IRS frowns upon the practice of cost segregation. In fact, there is no indication that applying this method of depreciation has any downside from an IRS perspective, and the IRS has stated on multiple occasions that cost segregation is the correct way to depreciate real estate assets. The only caveat is that the methodology you use to determine when assets should be depreciated must meet strict standards. To ensure clarity, the agency published a comprehensive guide to approved cost segregation study practices. This guide is available on the IRS website under IRS Cost Segregation Audit Techniques Guide.

You can simplify the process of classifying assets for cost segregation by hiring a professional who specializes in cost segregation studies. These individuals use approved methodology to inventory your assets and separate personal versus real property for depreciation purposes. If you plan new construction, bring your cost segregation specialist on-board while plans are being drawn up, as an evaluation of the property before infrastructure is in place can yield valuable information for your future tax filings. If you haven’t practiced cost segregation in the past, it’s not too late. There is a lengthy lookback period, which means you could be eligible for significant savings for previous years.

Speak with Paradigm Tax Consulting, located in Brentwood, CA. As a Certified Tax Coach, we help you understand the potential benefits you may realize through cost segregation, and learn more about the practice in our new release, The Great Tax Escape. This volume offers in-depth information on eligibility requirements for taking advantage of cost segregation benefits, as well as details on how this method can save you money on your taxes. You can purchase your copy today on Amazon or visit our consultation form to learn how you can get a free copy.

Quick Tips for Tax Savings: Physician Edition

Doctors offer critical services to the community through prevention and treatment of health issues. However, getting the necessary education and experience can be challenging – both physically and financially. In an effort to make life a bit easier for physicians, lawmakers have put together a variety of programs to reduce tax liability for doctors. Maximizing these opportunities in combination with other tax-reduction strategies can dramatically increase the rewards of working as a healthcare provider. The Amazon Best Selling book, The Great Tax Escape, includes in-depth information on taking advantage of these tax savings techniques. Learn how to get a free copy of The Great Tax Escape here.

Small Changes Add Up to Big Savings

It may not be possible to implement all available tax savings strategies at once, but making small changes in managing your practice quickly adds up. Over time, continue to add layers of savings by implementing additional strategies. Before long, you will see your tax bill go down, even when your income is going up. These are just a few of the tips you will learn more about in The Great Tax Escape.

The Case for Specialized Financial Professionals

Free and low-cost budgeting and financial planning tools are great for those with basic financial situations. However, your position as a practicing physician is too complex for these platforms. Enlist a team of professionals with specific experience in tax issues that affect health care providers. Not only will they help you save your money more effectively – they will also assist you in planning major purchases to minimize tax expenses. Long-term, you are likely to realize a significant return on this investment.

Common Deductions You Probably Aren’t Maximizing

Though you are already aware of many deductions available to you, it is likely that you are not yet getting the maximum tax savings you are entitled to. For example, continuing education expenses, depreciation of your medical equipment, and student loan interest are frequently underreported on physicians’ tax returns. Your Certified Tax Coach can guide you through the nuances of these deductions, as well as the specific opportunities available to medical professionals.

The Benefits of Better Record-Keeping

Whether you work for yourself or you are employed by a larger healthcare organization, you are always moving at a rapid pace. For many physicians, that means letting the little things slide. While you always meticulously update your patients’ records, you are probably less careful about recording your expenses. Over the course of a year, these small charges add up, and you could be missing out on significant tax savings for want of a few receipts. Make financial record-keeping a priority, and you will notice a difference in your year-end tax bill.

Be Ready for Retirement

Paying off your student loans often takes precedence over saving for retirement – especially when you are just starting out in your career. However, contributing to your retirement accounts now has across-the-board benefits for your current and future financial state. The funds you deposit are given special tax-advantaged status, and when you contribute regularly over a long period of time, you are better able to ride out the ups and downs of the market.

Request your free consultation today by calling Paradigm Tax Consulting at 925-240-2886. As a thank you gift for scheduling your consultation, we’ll provide a free book, The Great Tax Escape.