Back to Blog

How to use Passive Income Generators (PIGs) to offset Passive Losses

Taxpayers with high ordinary incomes are highly taxed. If you’re a high-net-worth earner, you’ve likely diverted some of your income into investments. The most common investment type for those in this situation is real estate. Passive income is taxed with a different set of rules than the ones surrounding your ordinary income. Passive income tax rates are still high, and passive losses can add to the financial burden that real estate investments creates. But passive income generators can be ...

November 25, 2020

What You Need To Know About The 83(b) Election And How It Can Help You Save BIG On Taxes

If you’re making a large sum of ordinary income while investing, you’re in a unique tax situation. Ordinary income, like what you earn on through your W-2, on a Form 1040 income is highly taxed. But if you use the right methods to handle your investment income, you can save a lot of money. If you’ve acquired restricted stock options, you should consider the Section 83(b) election form.  A Section 83(b) election form is an investor-specific form that may be in your interest to fill out...

November 19, 2020

Avoid early IRA withdrawal penalties by using the 72(t) rule

Have you been saving for your retirement? If you’re making a high enough income, you’re likely building up healthy retirement savings. If you’ve also been receiving a match on your contributions from your employer to a 401(k), you’re likely doing even better. But regardless of which retirement accounts you’re using, you’ll face the hefty 10% penalty for early withdrawals if you’re younger than 59½. Even if you’ve saved a lot of money in retirement accounts, you may become tempte...

September 30, 2020

Should I pay off my mortgage or invest?

Professionals with high incomes are often faced with difficult financial choices. One of the most common and difficult choices is whether to focus on paying off a mortgage. Doing so can remove one of the largest financial burdens most individuals face. Alternatively, investing in your future may seem a better idea than focusing on your mortgage. So, if you’ve found yourself having to make such a choice, which option makes more sense: pay off the mortgage or invest? Investing in your financial ...

September 16, 2020

When do I file MFS versus MFJ?

Your marriage status has a large impact on your taxes. But even when you’re married, you still have a serious tax choice to make. While taxes aren’t the most romantic topic to discuss with your partner, you’ll want to have the talk. So, cuddle up in bed, get a glass of wine, grab your tablet, and read this article to each other. If you’re married by December 31st (even at 11:59 pm), you have two choices to make. You can file jointly or separately. Your choice will have several tax implic...

September 10, 2020

Changing the character of your income to save tax

If you’re making money, you’re going to pay taxes. There’s simply no way around it. However, the nature of your income will determine the amount you pay in taxes. Furthermore, you can change the character of your income to save more of your income....

September 2, 2020

How to make taxes less daunting

Well, we all fear the unknown. And for many business owners and medical professionals, April is the month of the unknown. How much money will I owe? How much money will I have left? What are the consequences of that financial decision I made earlier in the year? Many tax preparers miss crucial opportunities to save their clients money before tax season begins. We believe in being proactive rather than reactive. Tax season is smooth sailing when you have an all-year plan....

August 26, 2020

Why real estate can help lower your tax bill

Too many doctors rely purely on W-2 income, and the harder you work and the more patients you take on, the higher your taxes end up being. For physicians and similar busy professionals, real estate investing can be a low-maintenance, low-effort form of earning additional cashflow with a potentially much lower tax rate, freeing you up to take on a little less work and enjoy more free time with family and friends....

August 24, 2020

How can I strategize my tax planning as a W-2 only earner?

Form W-2 is the most commonly filed tax document in the US. It’s a simple document that employees file every year. These taxes will cost you 10% to 37% of your income, depending on how much you make. But there are several ways to save on taxes that don’t immediately meet the eye. With some careful proactive planning and perhaps a few transfers, you can reduce your tax burden....

August 17, 2020

Your objections, fears and worst-case scenarios of working with us

Today let’s take a moment to address the elephant in the room.  You may not have had the best experience with financial advisors so far in your career.  Many of our clients were preyed on by insurance salespeople when they came out of medical school. Coming from a physician’s family - I know what that experience is like, and how it can break your trust. Chris and I were duped into a whole life insurance policy that we still own today (it’s grown too much to make it worthwhile to ...

July 20, 2020

How a couple saved $126,000 in tax for retirement, and found peace of mind during a big business change

Jeff and Trisha are a couple with two kids living in California. When they came to Cerebral for advice, Jeff had recently changed from doing W-2 work to running his healthcare business as a full 1099 independent contractor. Jeff already had a strong feeling he was paying too much tax. He had all kinds of questions about what entity he should be, how to maximize his retirement contributions and what to do about health insurance....

July 13, 2020

Signing bonuses and their tax implications

A signing bonus is a financial incentive that an organization or business offers a prospective employee in order to woo them to join up. It could be given in the form of a one-time major cash payment or stock options and may as well be a combination of both.  Signing bonuses are mainly offered to highly valued candidates who are on the radar, or potential getting offers, from other companies or businesses. In the health sector, hospitals often include a signing bonus to recruit and retain p...

June 29, 2020

Should I buy a vehicle through my healthcare business?

Buying a vehicle through your business isn’t entirely different from buying one personally. But before you buy a vehicle under your business’s name, there are several factors you must consider. When you buy a vehicle through your business, you will be faced with different requirements. The ways the IRS accounts for personal and business vehicles are very different. For every step of the way from financing to taxation, you will play by different rules. Healthcare/medical businesses can benefi...

June 22, 2020

Step-by-step tutorial of the Mega Backdoor Roth through Fidelity Investments

I am always looking for ways to put more money into my retirement. Chris and I currently have 10 (yes ten!) retirement accounts with a mixture of pre-tax and post-tax accounts. Each account has its own unique set of rules, contribution amounts, and investment strategies. For example, Chris, at his neurosurgical practice, has a 401k Profit Sharing Plan with Cash Balance Plan (Defined Benefit Plan) and I have a Solo 401k with Profit Sharing (we both have our Roth IRAs). A few years ago, I came acr...

June 19, 2020

PPP Loan Forgiveness - Action Steps

The PPP Loan you received is a 2-year loan @ 1% APR in which payments start within 6 months from the funding date. Most borrowers will request the loan forgiveness within that first 6-month period to avoid making any payments to the loan.For the forgiveness process you might need to use the standard SBA form 3508, in which you can download with all instructions here: https://home.treasury.gov/system/files/136/3245-0407-SBA-Form-3508-PPP-Forgiveness-Application.pdf It is possible that Treasury or...

May 28, 2020

Are you getting as much mileage out of your deductions as you could be?

The quickest way to put more money in your pocket is to reduce taxes. But if you’re a savvy taxpayer – or you have an experienced tax preparer on your side – there are a myriad of possible deductions that you can take advantage of that will keep more of your own money with you, versus handing it over to Uncle Sam....

April 21, 2020

Are solar panels a good investment for my home or office?

We recently had a question from a client about solar panels and their potential tax advantages. We’re actually looking into a solar panel system ourselves as we continue with a new house build, so this couldn’t have been a more timely question! Here’s the question in full: We are considering installing solar panels this year, given the potential tax credit (and planned decrease in the credit over the next few years). Does this seem like a reasonable tax strategy? Would this ...

April 17, 2020

How to make sure you keep your retirement money

Most people, regardless of how much income they earn, are taught that setting aside money in an employer-sponsored and/or individual retirement account is the best way to ensure that money will be available in the future. But the truth is, that’s only partially right. While saving and investing can certainly help you to build up a nice-sized account, what really matters is how much income you’ll be able to put in YOUR pocket when you need it, and whether or not it will be enough – after ta...

March 26, 2020

What is income shifting, and how can it reduce my tax burden?

The ability to create more cash flow from the money you already make is a key step towards building true wealth. One way to accomplish this is through a strategy known as income shifting.  Income shifting is not a new concept. In fact, this strategy has been used by the wealthy for generations to help with legally sheltering their income from taxation. Income shifting is defined as the transfer of money within a business or between family members with the purpose of decreasing tax liability...

March 16, 2020

What changes does the Secure Act bring? How might physicians be affected?

At the end of 2019, the Setting Every Community Up for Retirement Enhancement (SECURE) act was signed into law, bringing in new changes and adaptations with regards to retirement savings.  On the whole, the changes are positive. The bill appears to acknowledge that we’re all living a little longer, incentivizing businesses to provide savings plans to a wider range of employees, and allowing a longer time period for contributions. However, there are fears that the change could hurt benefic...

February 25, 2020

Where to start with choosing an entity

Okay, let’s start at the very beginning - what actually is an entity? A business entity is an organization that has been created by one or more people to carry on a trade or business. We’re going to look at some of the most common types in this blog.  Just like choosing the best plan of care for a patient, deciding on the right business entity can impact both your short and long-term financial results.  The structure that your practice assumes is important in determining how much m...

January 29, 2020

5 success rules for your S-corp

So you’ve set yourself up as an S-corporation.  As your business grows, it’s great to think about yourself as a separate entity from the business, so you’re not muddying the waters between personal and work finances, and you’re protected personally from liability.  While you’re legally a separate entity from your business under S-Corp, it’s important to consider yourself an employee in the business. We get a lot of questions about the details of this structure, and how best...

January 3, 2020

Tax Tip Tuesday: Passive Income

*this is a transcript taken from our weekly Tax Tip Tuesday videos on Youtube.  You can watch it here.Hey everyone. Welcome to another Tax Tip Tuesday. My name is Alexis Gallati with Cerebral Tax Advisors, and today we're going to talk about passive income. Well, basically I'm just going to explain what exactly passive income is. And it's pretty simple.It's not active income, which is income that you're actively earning, like your W-2 wage, or me going and doing tax work, or you doing your ...

December 18, 2019

Tax Tip Tuesday- 2019 Year-end tax tips to lower your liability

*this is a transcript taken from our Tax Tip Tuesday videos. You can find the full version on Youtube here.Hey everyone, welcome to another Tax Tip Tuesday. My name is Alexis Gallati, and I'm with Cerebral Tax Advisors. Now, what we're gonna talk about today is the Section 199A deduction, and how you can actually go and lower your taxable liability so you can take advantage of this deduction. Now those of you that aren't familiar with it, that is that 20% automatic deduction that business owners...

December 10, 2019

Tax Tip Tuesday- The Augusta Rule

*this is a transcript taken from our Tax Tip Tuesday videos.  You can watch the whole thing on Youtube here....

December 4, 2019 Posts 1-25 of 51 | Page next