Keeping current on ever-elusive tax codes that will affect you in 2012 makes good business sense.
TODAY’S TRYING ECONOMY REQUIRES THE UTMOST VIGILANCE in attending to the business side of your practice.
Increasingly complex and changing tax codes, as well as the ever-shifting political climate, are not making it any easier.
Though it’s a bit premature to predict what’s on the horizon for 2012, given that Congress is continually altering tax laws, you should turn your attention to two key changes in the tax code during the upcoming year. If you think that these changes might affect you, you should speak with an accountant to understand the implications.
Key change No. 1
The first amendment of note is the expiration of the Section 179 increase in tax deductions, which was in effect for 2010 and 2011.
This means that as a chiropractor, you may be able to expense up to $500,000 of equipment placed in service, and may be able to invest up to $2,000,000 in equipment.
In short, if you have large equipment investments you could benefit the most. If you purchased $500,000 in equipment, you may be able to deduct the full amount from your 2011 income.
Key change No. 2
The second major change in the tax code that will affect chiropractors pertains to those doctors who sell supplies to their patients.
In the coming year, credit card processors will be required to send a 1099-K Merchant Card and Third
Party Network Payments form to anyone who sells supplies totaling $20,000 and 200 separate transactions.
This means that chiropractors who meet these limits will automatically have this income reported to the IRS. It’s up to you to be certain that the IRS has any and all records of valid expenses and deductions that you are claiming against your revenue.
This can be a formidable task, but it is essential to confirm the accuracy of your reported income. Thankfully, there are companies out there that offer free tools that allow you to validate the correctness of these 1099-K forms.
It is, however, likely that this new requirement may be tweaked again. But you can stay informed on any potential changes with online tax resource centers.
With these changes in mind, it is also important to note that the tax rate reductions for long-term capital gains, which were implemented in 2010, will still apply for 2011 and 2012. Your Schedule D may stay the same, and you should consult an accountant about keeping traditional tax strategies maintained as well.
To take full advantage of the upcoming changes in the tax code, consider the following items while preparing your taxes with a professional:
- Check to see if you have any equipment purchases that can be expensed.
- Look into a home-office deduction. Even if you treat patients outside the home, attending to business and administrative paperwork within your home may qualify you for a break.
- Be sure to tell your accountant about any charitable contributions you have made. This includes donations of any obsolete equipment.
If you received a Form 1099-K, ensure that the reported totals are correct. Some free versions of software enable you to check these totals easily.
