Spring 2018 issue of Horizons

include such amounts in unrelated business taxable income. It appears that the exclusion from the employee’s wages is unchanged. The new law applies to amounts paid after December 31, 2017. The estate tax incentive for bequests to charitable organizations has been altered. While the estate tax is retained, the amount exempt from the tax is increased to approximately $11 million for 2018 (plus inflation adjustments in subsequent years) for decedents dying after 2017 and before 2026. Pass-Through Tax Treatment Partnerships, S corporations and sole proprietorships with qualified business income (QBI) or active trade/business income excluding passive earnings, are now entitled to a 20% deduction on the lesser of taxable income or QBI, limited to the greater of 50% of W-2 wages or 25% of W-2 wages plus 2.5% of qualified property. Services entities such as health, law and accounting are not entitled to the deduction. However, there is a modified deduction for taxpayers carrying on a

specified service trade or business if his or her taxable income is less than $415,000 for married filing jointly or $207,500 for other filing statuses.

A few scenarios for doctors include:

Scenario 1: A married couple are both pediatricians and each earn $150,000 from performing services as a pediatrician. Their taxable income is $300,000, filing a joint return. There is a $60,000 deduction under this section. Scenario 2: A wife is a pediatrician making $200,000 per year and the husband is a pharmaceutical sales rep and makes $100,000. Taxable income is $300,000 but only $200,000 of that is from services performed as a doctor. There is a $40,000 deduction in this scenario. Scenario 3: A married couple are both psychiatrists and each earn $202,500 performing services as psychiatrists. Taxable income is $405,000 and they file a joint return. There is an $8,100 deduction in this scenario. This is because 9/10 of the 20% has phased out, so a 2% deduction is allowed.

HEALTHCARE SERVICES GROUP

RubinBrown’s Healthcare Services Group provides a broad array of services to a diverse group of clients in the healthcare industry including hospitals, physician practices, multi-site medical groups and not-for-profit health organizations. For more information, visit www.RubinBrown.com/Healthcare .

Tom Zetlmeisl, CPA, CFE, CFF, CGMA Partner-In-Charge Healthcare Services Group 314.290.3395 tom.zetlmeisl@rubinbrown.com

Eric Westby, CPA, CGMA Partner & Vice Chair Healthcare Services Group 314.290.3339 eric.westby@rubinbrown.com

Kristin Bettorf, CPA Partner & Vice Chair Healthcare Services Group 314.290.3416 kristin.bettorf@rubinbrown.com

Tax Cuts and Jobs Act: A Healthcare Perspective

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