If you thought medical school was complicated, just wait until you file your taxes as a medical professional. On the plus side, you’ll be awash in potential deductions and credits, but you might feel like you need to go back to school for accounting to understand how to take advantage of them all.
Or, simply hire a chartered professional accountant. We already have lots of expertise helping physicians and medical professionals like you. We’ll wade through the mud, ensuring you maximize every opportunity to reduce your tax burden. In fact, unless you have time to spare (and what medical professional does?) getting expert financial advice is one of the easiest ways to save money.
Tax season is upon us, so before you file as a medical professional, read up on what you need to know to prepare your taxes in the most efficient way possible.
How do you know where to start?
Filing taxes as a physician can be very confusing. The way you practice is as individualized as, well, that long list of symptoms your patient just rambled off.
Incorporated, partnership, sole practitioner … how your business is set up matters. (And here’s a tip – it doesn’t just matter during tax season. Sure, your taxes will be affected by your business structure, but you should get good financial advice throughout the year to make sure you’re operating in the most tax-efficient way all the time.)
Read and bookmark this quick run-down of the kinds of things you’ll want to consider before filing your taxes so that you’ll be ready to save money:
- Do you pay a salary to your spouse or child? There might be income-splitting advantages. If you don’t already, maybe you should.
- Fees, fees and more fees. It might seem like your dues are endless but guess what? Most are tax deductible. Take note of your union and other professional fees, including associations and provincial/territorial college dues.
- Insurance costs, such as malpractice and employment insurance premiums, are likely eligible for a deduction. This includes what you pay to the Canadian Medical Protective Association (CMPA) for liability protection.
- Did you move this year? Associated expenses, provided that you moved at least 40km to be closer to work, could be eligible.
- If you work from a home office, good news: since so many of us are working remotely in the aftermath of the pandemic, there’s a streamlined application to receive a flat rate deduction on your home office expenses, to a max of $500. If you’d rather, you can still make a more detailed application for additional deductions.
- Physicians who support a spouse, an eligible dependent, or act as a caregiver can receive tax credits, subject to eligibility requirements.
- And speaking of dependents, if you have kids, childcare expenses (including daycare, babysitters, nannies, and even camps and boarding schools) are eligible.
- Does your spouse have unused tax credits? Particularly if your partner earns very little or nothing, taking advantage of their unused tax credits can really help you out.
- Don’t forget about tax credits for RRSP and CPP contributions. If there’s disparity between your income and your partner’s, you might want to start making spousal RRSP contributions, too.
- We’re not sure how many physicians are still offering house calls, but if you’re one of them, good for you! Submit your vehicle expenses for a deduction. You’ll receive a portion of your operating costs and even interest on leases or loans. Make sure you track those kilometres.
- Charitable donations and your family’s medical expenses also qualify.
- And while you won’t be able to qualify more than once, if you bought your first home this year, you’ll get a tax credit for that as well.
Is your head spinning yet? This isn’t even an exhaustive list (though it may leave you feeling exhausted).
Listen, we know you have more important things to do than sort through all these deductions and credits. But we also know you work hard for your money. While you’re focused on building your practice and providing patient care like the medical professional expert you are, let the financial experts take care of the rest.
Consulting a chartered professional accountant with expertise in filing the complicated tax returns of busy medical professionals will pay dividends in the long run. We’ll advise you on how to capitalize on deductions and credits to minimize your tax burden. And we can also get you set up for efficient long-term planning, like whether or not you should incorporate your practice and how much you’ll need to invest to protect your future retirement goals.
With tax season upon us and the deadlines feeling uncomfortably close, it’s time to make a call to a financial expert. Finances are complex, but doing your taxes doesn’t need to be. Let MMT Chartered Professional Accountants check this task off your list, and get back to what matters most to you.