Background: Download Tax Summary
A pediatrician and spouse with W-2 income of $250,000 and rental properties generating an additional $25,000 of taxable income each year were paying $65,000 in taxes annually. The spouse had chronic medical expenses that cost $15,000 per year out of pocket, that were non-deductible due to their income. The client also spent several thousand each year on continuing education, travel, and licensure expenses that were not deductible.
The client wanted a 5-7 year retirement plan, has a conservative investment outlook, and wanted comfort that their assets would cover both retirement needs and medical care.
Fortunately, they called one of our partners at Cash Balance Advisors!
Based on the client’s preferences, cash flow needs, and budget, we designed their custom tax plan with:
• a newly formed professional association employing the pediatrician, contracted with the previous employer
• designed a retirement savings plan to contribute $110,000 annually into conservative investments to protect principal
• enhanced health care coverage and elected a tax-deductible medical reimbursement plan paid for by the association
• implemented tax-deductible travel and education reimbursement plans paid for by the association
An overall 80% tax reduction with combined Federal & State taxes reduced from approximately $65,000 per year to:
2016 – $32,672
2017 – $12,712
2018 – $12,883
The pediatrician realized increased retirement savings of $176,000 during 2016 and 2017 of which $91,000 was funded with tax savings, and long-term net worth increases of over $1Million – all directly attributed to the tax plan.