Affordable Care Act – Beware of the Medicare Surtax for High Income Individuals

Patient Protection and Affordable Care Act

By Stacey Gorowitz, CPA, MBA  Although the Patient Protection and Affordable Care Act was signed into law in 2010, many continued hoping the health care law would go away. We must now accept the tax implications it poses and plan accordingly.  In general, individuals with Adjusted Gross Income (AGI) greater than $200,000 should pay close attention. The two surtaxes, which will be imposed on higher-income taxpayers, effective for tax years beginning after December 31, 2012 include: 1) Medicare Surtax on Earned Income – In addition to the current 1.45% Medicare portion of payroll tax there will be a new 0.9% surtax applied to taxpayers who receive wages or self-employment income in excess of $200,000 for single and $250,000 for joint returns.  This surtax is not imposed until after a taxpayer crosses the earnings “threshold”. 2) Unearned Income Medicare Contribution – 3.8% Medicare tax is imposed on the lesser of net investment income or Modified AGI (specifically defined by … [Read more...]

Financial decisions today impact tomorrow: What they didn’t tell me in medical school

I majored in accounting and learned about numbers and their interactions; not much time was spent on marketing. As a medical student, you were taught about biology, diseases and their treatment but not much about the finances. After working with doctors who are mid-way through their careers, I wish I could have spoken to them when they were first starting out. Here are a few non-medical lessons that should be covered in medical school: 1)   Control expenses: As a physician, you will have more income than most people.  However, you will also have more expenses; your student loan debt is likely substantial.  This number is too big for most people to grasp, so they take the “head in the sand” approach. But there is a better way! Consider the ratio of your monthly income to the monthly payments for your school debt, house payments, credit card bills and taxes. A monthly overview gives a better perspective than totals. For example, a $150,000 salary yields $12,500 monthly. … [Read more...]

Is My Accounting Firm Trying to Fire Me?

By Stacey Gorowitz, CPA, MBA With the continuing mergers and consolidation in the accounting industry, if you suspect you’ve become a little fish in a big pond, you’re probably right! As accounting firms move upstream and target larger prospects, they do not want to offend their existing clients by telling them that they are no longer an “A” client and it’s time to move on. Your firm may not directly tell you that your work is no longer a good fit for their firm. Even if you have a long relationship with your existing accounting firm, they may be trying to fire you if… 1)    They do not communicate with you throughout the year or return phone calls and emails in a timely manner. 2)    You feel like you’re training the person preparing your return because every other year there is a new staff person you have to educate about your business ,industry and the history of your family’s tax transactions. 3)    You’re concerned about the quality of the work because it feels … [Read more...]

Should I use an Accountant or a CPA – Does it really matter?

Stacey Gorowitz

By Stacey Gorowitz, CPA, MBA As a CPA in public accounting I often find many differences between a CPA and an accountant who is not a CPA. There are, of course, legal and licensing requirement differences, some of which are listed below. However, from a practical standpoint, does it make a difference to you as a person who needs to get your business financials in order? A few key differences are: Continued Education – a CPA is required to take a minimum of 40 hours of continued professional education per year. Continued education can be in many disciplines including tax law, financial statement reporting standards, ethics and technology to name a few. Education – a CPA is required to have at least an additional year of accounting courses beyond a 4-year accounting degree and typically studies extensively for the CPA exam, which covers extensive complex material beyond what is mastered in an undergraduate accounting degree. Financial statements - a non-CPA cannot … [Read more...]