229: Maximize Your Income: Tax Strategies Every Physician Must Know with Doc Wealth
Are you a physician looking to keep more of your hard-earned money? Do you feel like you're paying too much in taxes and not sure what to do about it? If so, this episode is for you.
In this episode, I talk with Dr. Mark Applegate and Laxman Pichappan, the founders of Doc Wealth, a tax strategy and CPA firm tailored specifically for physicians. As a physician, you have unique challenges and opportunities when it comes to taxes, whether you're a W-2 employee or a business owner.
Mark and Laxman share their expertise on how physicians can reduce their tax burden using a variety of strategies. They discuss the difference between a CPA and a tax strategist, and why it's so important to work with professionals who understand the specific needs of physicians. If you're ready to take control of your taxes and keep more money in your pocket, you won't want to miss this valuable episode.
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What You'll Learn from this Episode:
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Why most CPAs are not equipped to provide proactive tax strategy for physicians.
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The key differences between being taxed as a W-2 employee versus a business owner.
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How real estate investments, especially short-term rentals, can provide significant tax benefits.
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The power of setting up the proper business entity, such as an S Corp, to reduce self-employment taxes.
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Why defined benefit plans and cash balance plans can be a game changer for high-earning physicians.
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How to take advantage of the Augusta rule to write off personal home expenses.
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The importance of proper documentation when expensing business costs like vehicles and home offices.
Listen to the Full Episode:
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- Doc Wealth Intro Call
Welcome to The Wealthy Mom MD Podcast, a podcast for women physicians who want to learn how to live a wealthy life. In this podcast you will learn how to make money work for you, how you can have more of it, and learn the tools to empower you to live a life on purpose. Get ready to up-level your money and your life. I’m your host, Dr. Bonnie Koo.
Hey, everyone. Welcome back. So today, I am interviewing the two founders of a company called Doc Wealth, and they're basically a tax strategy and CPA firm really tailored for physicians. And I was really excited to learn about them because one of the most common questions I get from doctors is how do I reduce my taxes? Whether you're a W-2 employee or a business owner, newsflash, if you're W-2, there are a lot less options for you, but there are options.
And so, as you know, my goal is to always educate you on what's available and what's possible. I do have a financial relationship with them. And what that means is if you use my specific link to schedule a call and you do end up working with them, I do get a small commission. In fact, if you don't know already, if you go to my website, wealthymommd.com, and if you go to /resources, that's with an S plural, you'll see a list of either companies or tools that I believe in and think they're great and a value add that you can basically peruse. I don't have financial relationships with all of them, but a lot of them I do.
You'll see that I have a list of what I mostly personally use for my own business. And so obviously, I like them if I'm using them myself. So do you definitely want to go and check out the resources I have available there? So again, you're going to learn so much. We give tax tips for W-2 employees, as well as business owners who do have a lot more things they can do.
My goal is for you to at least take one of these things, look into it, maybe even schedule a consult with them to learn more about their services. And to do that, using my link, it's wealthymommd.com/docwealth, that's D-O-C-W-E-A-L-T-H. Here's my conversation with the founders of Doc Wealth.
Bonnie: Welcome to the show, guys.
Dr. Mark: Thank you. Yeah. Happy to be here.
Bonnie: Yeah. So we've got two people on which we don't normally do. So hopefully we don't talk over too much, although it's bound to happen. So why don't you guys introduce yourself? Let's start with you, Dr. Applegate.
Dr. Mark: Yeah. So my name is Mark, Dr. Applegate. I am an emergency medicine physician, primarily work exclusively as a locum physician, kind of traveling more so in the local region. I'm also a founder of Doc Wealth, where we focus on positions as a tax firm.
Bonnie: Yeah, what about you?
Laxman: Yeah, so I'm Laxman Pichappan from Florida. My background is a CPA. Spent a lot of my time in Silicon Valley, over a decade working a lot of tech companies like Apple, Groupon and such. And then yeah, co-founder and CEO at DocWallet.
Bonnie: Awesome. So you guys have such an interesting origin story and I'm so glad we were able to connect. So I heard a little bit from Laxman before, but Mark, I'd love to just hear like how did this – because you guys are friends from college, is that right?
Dr. Mark: Yup. Basically, kind of kept in touch throughout the last decade. Kind of lost track in med school and the residency grind and no time for personal life. I started working exclusively as a locums doc 1099 and found that essentially, you know, you're a single member business owner and really struggled at that point finding, you know, a good reliable CPA that was comfortable working with a single member 1099 and maximizing and understanding the nuances of locums and travel in multiple states as a 1099 trying to maximize the strategy, understanding the differences.
If I'm in this state, this state, do I need a LLC? Do I need a PLLC? Do I need a PC? Do I need a foreign qualification? There's just a lot of nuances that come with being a 1099 or particularly a travel physician. That's when I reached back out to Laxman who I knew was in the CPA space and I said, hey, why don't we bring both our expertises together and kind of focus to serve the physicians in the space the best we can.
Bonnie: So did you have – I'm just curious, did you have this business idea right off the bat or was it more like, hey, Laxman, I need some help. Can you help me?
Dr. Mark: Yeah, so, no, I do a lot of like thinking, designing and first I identified the problem and said, hey, I'm struggling to find a solution. Why don't we just create it?
Bonnie: Yeah, I mean, it's very obviously, that's also you're a very entrepreneurial clearly. So I just love that because I think doctors are natural problem solvers. So I'm always talking about how I think every physician is an entrepreneur themselves, even if they don't think of themselves as one, because we are solving problems all day.
So I just love it because I work with a lot of clients in the money space, obviously, and that's like one of the top questions is how do I save on taxes? I think people get confused between the difference between a CPA and a tax strategist.
They're not necessarily the same person. And just because you have a, like CPAs come in all different shapes and sizes. So I educate on that. Because I think people do have a lot of bad experiences with CPAs like, oh, do I get charged every time I email them? They don't really help me with tax strategy.
And I think what I try to do is just kind of explain that you kind of have to find out what is the CPA actually do, like what are the services are going to provide? And some of them do have, you know, experience with tax strategy, but I think a lot don't. And Laxman, you can talk more about this. And then obviously knowing the specific doctor market, can you speak to that a little bit?
Laxman: So being a CPA for over 15 years, tax is not something we specialize in in grad school at all. It's something that you kind of really learn once you get into practice. And so actually most CPAs that you work with and what we realized is 95% of CPAs don't know tax strategy. It's very much a subspecialty. So that's why you see that most CPAs just file taxes.
Filing taxes happens after the tax year is done. To be able to deduct anything and get savings and lower your taxable income, you have to do it in the tax year.
Bonnie: Like doubt, right?
Laxman: You would think so. You would think so, but it's actually not as commonly known. And so, a lot of that, you know, we've had to kind of go through the education process with different positions on what that difference is really because not many know. But so, what we did was we spent about six months just researching what are all the CPA firms out there, what do they do, and as you mentioned there's not a lot of transparency on the costs, on every single time I get a call, do I get charged. So our focus was full transparency, everywhere we post we say hey we have one flat fee, it's just all inclusive of everything, You don't have to worry about getting on a call.
Am I getting charged? You can reach out to us however many times you want throughout the year and we're really here to help. So we spoke to about 700 physicians just to get a market search. And As Mark mentioned, Mark is always data oriented. The number one pain point was, hey, my CPA is not a tax strategist and whenever I reach out to them, I can't get a hold of them.
It takes a week.
Bonnie: So common.
Laxman: It takes two weeks. That was overwhelming. Over 90% mentioned that they can't reach your CPA. And being friends with Mark for so long and have a lot of physicians who are friends, I can never get a hold of them. So I know all of you are very busy.
And so when you need an answer, you want it pretty quickly. You don't have time to just wait around. If you forget about it and that's money that's on the table, right? And so we really prioritize that. And so staffing up correctly and we ensure like a 48-hour business response time.
Bonnie: It sounds like you guys really did your market research. It's very like well thought out. I love it. I didn't know this part of the, about the business. So like, cause I'm thinking I would love for you to explain what tax strategists do, what do you guys do specifically?
And then I'm curious how that goes along with your investments knowledge because obviously certain types of investments have different tax implications. So I'm just I'm curious on the breadth of knowledge. So let's talk about what is a tax strategist and why does every person, every physician need one?
Laxman: Whenever you're making money, you're going to have to pay taxes to uncle Sam. And that becomes very important because there's two ways of actually making money. Being a finance person. One is your income. The other is paying lower taxes.
And so as a tax strategist, we look at the 75,000 page tax code and evaluate, okay, what are the different strategies in the tax code that we can leverage legally and then be able to work with our single member or multi-member businesses to lower income. So that can be anywhere from setting up the right entity structure and LLC, S Corp, et cetera, to expensing meals on travel. Everything has to be following the certain tax rules related to the business. It can be all the way complex and to investments that you mentioned. Real estate investments are one of the biggest vehicles for minimizing taxes.
The tax code favors business owners. They don't favor W-2 because at the end of the day, we're a capitalistic society. And so the tax code, anyone who's building their own business is creating or furthering the economy. And so there's a lot of different tax strategies that are out there. But happy to go into any detail or...
Bonnie: Because the people listening who are W-2 are like, they're gonna be like, okay. So I think, you know, they hear time and again, there's not much for me. So why don't we speak to, because a lot of them, I don't know, you might know the percentage, but there's a, maybe it's half at this point of physicians are W-2. I think it's probably more than half. So like, what are, let's do some simple things.
I bet there are things that people aren't even doing that's like the simple stuff. So why don't we start there?
Laxman: Yeah, for sure. So let's talk about W-2. W-2, there are strategies. There's typically, I would say, 4 main strategies. The easiest one I would say is doing a mega backdoor Roth, right?
This is after tax, but instead of contributing only $23,000 to a 401k, you can contribute $69,000 that grows tax-free. Very simple to do, doesn't take a lot of time, you can talk to your financial institution, the bank that you work with, or your financial advisor, and they'll be able to do that.
Bonnie: But that's not available to most people, right?
Laxman: It is very much available to vast majority. You may have exceptions based on how your employer sets up the 401k, but most W-2 should have that availability. There are ways to have a loophole around it where you can contribute into an IRA and then have a conversion to a backdoor Roth and then do a mega backdoor.
Bonnie: Okay yeah because the backdoor Roth most people are familiar to exist although not everyone so what we mean by that I never want to assume someone listening understands all this so a backdoor Roth is basically the ability to contribute to a Roth IRA despite being above the income limits according to the IRS. But my understanding is maybe I'm wrong is that you need a 401k plan that allows in-service Distributions and a lot of plans don't allow that. I know that like Kaiser a lot of the Kaiser's on the West Coast do allow that. So a lot of people are able to do that. But because when I worked for a large hospital, two places that had foreign case, neither of them allowed it because isn't that a requirement?
Laxman: No, no, that is our climate has had in service. So you're correct. Not everyone is every 401k allows that. But you know, if it is, then you should definitely maximize it, especially if you have money laying around.
Bonnie: Okay, so what is it?
Laxman: Yeah, so mega backdoor Roth is essentially where you're able to contribute up to $69,000 into a traditional and then have it convert into a Roth IRA. So now this is all post-tax. So I want to make it clear, this is not going to lower your taxable income, but this is still important if you really value retirement planning and want it to grow tax-free. It alleviates that $23,000 threshold otherwise.
Bonnie: Do you still recommend that for people who live in like California or New York that are high state income tax?
Laxman: So what I would say is that if you have enough money left over after all your taxes, taking care of all your expenses and it's sitting on the sidelines and you have enough comfort, then it makes sense. You never want to overextend yourself. It's not worth it to overextend yourself.
The next item for W-2 is I would say real estate investment. When you're W-2, you can do basically a short-term rental and have it as a cost segregation, do a cost segregation study.
And What this actually means is when you're W-2, the short-term rental is the only real estate investment that enables you to have active participation. What that means is whenever you accelerate depreciation or lower your taxable income, you have to be putting a lot of time towards that. In a long-term rental, it requires you to have 750 hours of active participation in the year. As a W-2, it's just not possible because you're working a full-time job. That's why long-term rentals are out.
And for short-term rental, you need only 100 hours of active participation. And so this is usually kind of basically doable. And so most of the W-2 positions that we work with definitely go down this route.
And what cost segregation means is that once you have the short-term rental, say for example you buy a $500,000 property, based on the 2024 tax rules, there was 60% accelerated depreciation. So, at a high level, a $500,000 property, you can write off around $100,000 against your W-2 income.
If you're making $400,000, you're only paying taxes on $300,000 now.
Bonnie: Again, just making sure people understand. So real estate, we mentioned earlier, is a great vehicle for creating wealth. And it's a great way to create wealth, not just because of the income it can produce, but also because of the tax savings. It's almost like you're getting like two lovers right to create income. Long term rentals, like, as you said, it's much harder because they have just rules that basically if you're a full time position, you cannot take advantage of it.
It works if you have a spouse who basically doesn't work or works very part-time because there's stipulations on like, you know, you can't have a job. You have to work more hours as a real estate professional versus like your regular job. So it is harder, but there are situations where that works. And then also there's physicians who do decide to go part-time because they want to take advantage of it because they have the part-time physician income, but it's not hurting as much because they get to keep more of it, right? And so short-term rentals are more attractive because of what you just said, because they need a lot less hours.
It's very easy for physicians to get those hours and then have that ability to write off the depreciation. Because basically you can't really write off other expenses against your W-2 income. It's like there really isn't anything available to you. You can't write off your computer unless you're only – well, not unless, but unless your job reimburses you, you're kind of out of luck, right?
Laxman: Absolutely.
Bonnie: Is there anything else you want to say about short-term rentals?
Laxman: I mean, there's a couple more rules associated with that, but at a high level, the 100-hour after participation, short-term rentals are very popular as a tax strategy.
Bonnie: What else?
Laxman: Yeah, And then I would say oil and gas investments. I know the moment I mentioned this, people are like, okay, this sounds pretty risky and it's an investment. So there are risks associated with it. But for whatever reason in the tax code, oil and gas is considered an active investment. Unlike stocks, which where you’re passive, you don't control what's happening in the company.
If I invest in Apple stock, I don't control what happens. But in oil and gas, you're actually investing in a fund that is buying drills and procuring oil out. And so you get a K-1 with an oil and gas investment. And as a K-1, here, you're treated as a partnership and so an active. And so if you invest $100,000, typically, you can write off 90% of that.
So $90,000 is treated as a deduction against your W-2 income. Many different funds out there, some get oil, some don't. So there's definitely risk associated with that. So definitely do your due diligence with different funds. If they do well, they can average anywhere from 10% to 15% returns over five to seven-year period.
That's usually how long the drills and funds last to procure all the oil. But again, there, it is an investment and there are risks associated.
Bonnie: So yeah, it's important. Cause I think every doctor would love the easy button. Like what's a low risk investment that pays really well. I'm like, that doesn't really exist. But I think people want some kind of guarantee, unfortunately.
So I do invest in a mineral rights fund, but this particular one doesn't have any tax benefits. In fact, the income is considered ordinary income. So it's a very specific type because this company I work with, they also offer the type that you can write off against, but there's higher risk associated with. So again, it's all education. Okay, what's next?
Laxman: The last one is private foundations or charitable contributions. Typically with a private foundation, there is more administrative costs because you're basically creating your own charitable contribution company. But here, you can contribute up to like say about 30% of your total income and you can decide where you want to allocate that money. It could be to something that's very close to you, you know, boys and girls club or something that you create yourself. And instead of giving the money to the government, you're able to give this money to something that you're passionate about.
This is probably the least common overall, but it is an optionality.
Bonnie: So there's three ways to give that, you know, I'm broadly speaking here, right? You could outright donate it and as long as it's above the standard deduction threshold, you can write it off, right? And then there's donor advised funds. So what's, which is pretty easy, right? You just open an account on like Vanguard or Fidelity, Charitable, whatever.
So tell me what's the advantage of a foundation versus a donor advised fund.
Laxman: So the, through a foundation, you can do a combination of the foundation's limits. Plus you can do the charitable contributions through a 503c as well. So there's a little bit more you can contribute in aggregate. So there's a benefit on that side. The other benefit is that maybe there's these charities that you don't feel as close to and you can actually control exactly how these funds are being spent, right?
And so there's just a little bit more control at the end of the day.
Bonnie: But you can do that with a donor advice fund, right?
Laxman: We can do with a donor advice fund as well. I think it still has a little bit of limitations. The private foundations basically it's all controlled by you completely.
Bonnie: So the tax break in this case is more on the, you know, you're doing the money so it's no longer yours, but it does reduce your taxable income. And so, you know, I'm just trying to make sure people understand there's different ways to do that. So some of these aren't the easiest to implement and involves like risk with investments. But if you're listening, you know, you're someone who hopefully is wanting to invest your money. So it's like if you're going to invest your money, might as well maximize the return and also get to keep more of the active money that you, cause I think people forget that.
So now it's just what you make, it's what you keep, right?
Laxman: Exactly.
Bonnie: So, okay. And then obviously there's pre-tax retirement accounts. I think most people know that if you're going to do that, then you can maximize the employee side, which is kind of like your limit. And then if you're 50 or over, you have a little bit more. My partner just turned 50, so we're like, yeah, we can do a little bit more.
Okay. So let's switch over to on the business side. There's a lot of stuff, so we obviously can't cover everything, but what would you say, like, let's just give the top three or four things that are like the biggest tax savings?
Laxman: Yeah, absolutely. I think whenever you're a business owner, I think it's important, first you think about the entity structure. Is it an S Corp? Is it a C Corp? C Corp is usually for large corporations.
It gets a lot more complex, so I'll probably stick to the LLC or the S Corp. At a high level, when you're making over $60,000 to $80,000 in 1099 income, it typically makes sense to do an S Corp. An S Corp allows you to lower the self-employment taxes as well as FICA. This can be quite beneficial.
For example, if you're making about $200,000, in an S Corp, you have to treat yourself as an employee. You give yourself a reasonable income. So out of $200,000, I see the general rule is about 35% of that is what you should deem as a reasonable salary. So $70,000 is what you pay social security taxes and FICA on. The other $130,000 is a distribution. You still get the money, but you don't have to pay any of these self-employment or FICA taxes.
That equates to over $10,000 in cash back in your pocket. That's that structuring of the entity is pretty important and can be massively helpful.
Bonnie: Yeah. Yeah. Still paying income and state taxes, that applies obviously, but you are having a tax savings. I get asked a lot, what do they consider reasonable? So I'm a W-2 employee, so I use a payroll service.
I use Gusto, very popular among small businesses. I pay myself a salary of $70,000. People always ask – Actually, my friend just texted me. She's a coach. She asked me, like, what's reasonable?
It sounds like you have a bit of a rule of thumb, 30%, 35%. That's a net profit, right? Or gross revenue. I'm curious.
Laxman: That's gross. We look at the gross level. We've seen a lot of different S Corps and what gets audited, what doesn't. Obviously, that's a good rule of thumb. When you look at reasonable compensation, you want to see what is someone actually doing this job as a W-2 making?
As we typically look at anything from the VA, for example, what is the VA? VA is pretty low in terms of comp, but it at least gives a sounding board of, okay, this is what the range should be. And we look at, okay, what is the higher amount of 35% or someone doing this W-2 job, you know, full time and that gives us a little bit of comfort and protection.
Bonnie: I'm just curious now that we're talking, I'm learning so much from you by the way, so thank you. I'm curious why it's based on gross versus net because the gross could be 500,000, but if the net profit is like 100,000, you can't pay yourself the whole – you know what I mean? So I'm just curious why is it based on gross and not net?
Laxman: Because there's a lot of things you can do to start expensing and lowering that amount. When you run a company, for example, it's your gross income, you pay your staff, so that's an expense line, right? And then ultimately you get down to your net profit. So the way the IRS has it is that you need to expense this before the net profit. But that's also what we've seen with most artists and stuff is they evaluate, okay, is it meeting that 35% threshold against the growth?
Bonnie: Okay. I'm like, does that mean I have to pay myself more? Anywho.
Laxman: Yeah, property, the next is, it goes back to real estate, right? Short-term rental, long-term rental. And as you mentioned, it depends on if you're full-time, if your main job is being a physician, then you cannot get that active status to accelerate depreciation. If you have a spouse that does not work or they can say that their main job is managing this real estate, then you have the opportunity to do between short-term rental and long-term rental. Short-term rental, 100 hours active participation, long-term rental, 750.
If you can do that, now you have options on what type of property. Again, you can accelerate that appreciation and high-level rule of thumb, about 25% of that purchase price is what you can write off. So that's, I would say, number two. Next goes into retirement planning. There's cash contribution plans, cash balance plans, SEP IRAs and solo 401ks.
The latter two is probably the most common. And when you're a 1099, it's the SEP IRAs and solo 401ks, you can contribute up to $69,000 as well on the max side. On the solo 401k, it's 25% of your gross income or $69,000, whichever is lower. And the SEP IRA, it's 25% of your net profit or $69,000, whichever is lower. That's what I would say is the next strategy that's quite common.
Bonnie: I'm curious what your thoughts are, SEP versus Solo 401k. I'm curious what your opinion is.
Laxman: So when you have an S Corp and you're solely 1099, I think Solo 401k has the most opportunity for you to be able to contribute more because it's not off of net profit. But almost I would say 99% of the time, it yields a more favorable outcome.
SEP IRA, we have a lot of positions that we see that are trending from W-2 to 1099 or doing a combination of W-2 and consulting on the side as 1099. In those cases, when you already have a 401k plan, it's going to limit what you can do on the solo 401k side. So then you see a SEP IRA, because now we look at separately, the SEP IRA has no impact to what you contribute on the 401k side.
So look at your 1099 business separately, What is your net profit? And then let's see what makes sense.
Bonnie: Yeah. So obviously, again, all this tax strategy and personal finances, it's very, it really depends on your situation. So tell me, Does the SEP IRA interfere with your ability to do a backdoor Roth IRA?
Laxman: No, you can still do a backdoor Roth and I personally do that myself actually.
Bonnie: Yeah, because people have heard there's a pro-rata rule so that's mostly for the rollover traditional IRAs then.
Laxman: Yes, exactly. Okay.
Bonnie: Did you mention defined benefit plans?
Laxman: Defined benefit plans, cash balance plans, you know, you can contribute far more than the $69,000. There's a few nuances on that side, but ultimately the most important I would say is I talked to this position yesterday actually, they're contributing $200,000 pre-tax, so they're lowering their taxable income dramatically. But you want to make sure that there's consistency because it's really important. There's rules with this that you need to be able to maintain this level of contribution. And so, any times where you may dip or you may be out of work or you lower your gross income for the year, then it gets a little bit tricky.
There's also more administrative work. You need an actuary typically to be able to do this. So if you are in that lazy boat or you don't want to deal with any of this, this may not be the best plan, but if you're willing to put in the work and get an actuary and do all this, it can be quite, quite beneficial.
Bonnie: Yeah. I kind of think of it as a bit more advanced. Would you agree with that? It's kind of like start with the solo 401k or the SEP IRA. And then once you're making so much money, then you should visit the defined benefit plan.
Laxman: Yes. And yeah, we typically see this with our more mature attendings. We've been attending for a while. Anyone less than 10 years, it's not very common at all.
Bonnie: I'm curious, what's the penalty if you can't contribute the high level? Because I know my understanding is you have to be able to contribute a certain amount of money, like a high, you can't just do two under one year and be like, oh, they're sure I didn't You know make as much money. So what happens if that happens?
Laxman: I have to double-check that I'm not 100% Certain on that I have to do it.
Bonnie: It's not good.
Laxman: It's not good. It's not worth the risk.
Bonnie: Yes, you have to really believe that you'll have to maintain that level of contribution for a certain amount of time. Okay, was there another tip you want to give for business owners?
Laxman: I would say the other ones are more kind of general, like Augusta rule is where you can use your primary home, rent it out and pay back your LLC or your S Corp for 14 days out of the year versus renting a hotel space or Airbnb to conduct a business meeting. You know, instead of paying $1,000 to that, you can just pay yourself $1,000 for using your home, primary home as space. And I would say everything is pretty general. As 1099, you can expense a lot of things, your laptop, everything home office. Home office is huge.
We had many physicians renovate their entire home office space, you know, build cabinets, get desks, do paintings, walls, all of that was expense, right?
Bonnie: All the furniture in it too, right?
Laxman: All the furniture in it as well. Artwork. Artwork, yeah. We had a physician spend about $25,000 and that is one of the best home offices that I've ever seen.
Bonnie: I just want to say about the Augusta rule for people who don't know this. This is only if you're a homeowner. So I rent, so since I rent, I can't take advantage of it. But the just to make sure people understand why it's so valuable is it's an expense for your business. So let's say that use your example of $1,000.
So it's $1,000 off of your top line for your business. And then it flows to your personal income, but that's not taxed. And that's what the Augusta rule is all about is the 14 days, that income is tax free. So again, it's like you're keeping more money. And then obviously, hiring your kids for the tax break, but then also you get to fund like a Roth IRA or something.
I keep not getting my act together. Do that for my son. I didn't feel comfortable doing that for a while, but you know, he is in my social media, decent amount. So. All right. Is there anything else that you want to say tax strategy wise, whether it's a strategy or just some education around tax strategy?
Laxman: Yeah. I mean, I think we cover a lot of it. Paying kids is very popular. There's definitely some guidelines around it. You don't want to pay a two-year-old, right?
Because that can be a red flag. Has to be legit. That's very, very important. I would say the last thing is probably we see pretty common is everyone needs a car. If you're 1099 and you're using your car as your main source of going to work, then that can be expense as well.
If it's over 6,000 pounds, it's 179, you can basically accelerate all of the car, the entire expense of the car. If it's less than 6,000 pounds, you can typically do it over five years.
Bonnie: What are the rules though? Can you only use it for business or what's the percentage?
Laxman: Yeah, you'd have to track what is the percentage that is used for business, but it has to be more than 50% towards business.
Bonnie: Okay. Well, I think I'm so glad we connected because again, I think a lot, like we talked about in the beginning, being educated about tax strategy, again, most CPAs don't have this information. So it's a big pain point for doctors because they see all the taxes go out of their account. That is one advantage of moving to Florida is there's no state income tax. It's significant, you know, when you make a high income.
That's been a nice little bonus. It's like we got like a raise just by moving here. Plus our cost of living is lower than Northern New Jersey. So it's like we got like a double raise in many ways. So, so tell us more about your company, who you work with and what people can expect.
Laxman: Yeah, absolutely. So Doc Wealth, you know, founded by Dr. Applegate and myself, We work with about 150 physicians right now across the country, all specialties. And our focus is completely from the physician perspective. You know, we did a lot of market research and what we really prioritize is a one-stop shop where you can get help with structuring your entity and LLC escort.
We take care of all of that for you all the way to setting up payroll, then doing the tax strategy throughout the entire year. We have multiple check coins. Everyone gets their own custom plan. We sit with you when you get on boarded, understand all of your different revenue sources, your family situation, where your investments are, come up with a different plan of all these different strategies that I mentioned and say, okay, this is what we can do. This is the documentation that's required.
These are the next steps. Let's go execute it in the tax year. And come filing time, let's save all this money. And so we also file as well. So now you're not getting stuck between talking to a lawyer, talking to someone who does entities, someone who does payroll.
We try to be in one place to save our physicians as much time as possible.
Bonnie: We call that brain damage. So you guys offer a free consultation, right?
Laxman: Yes. Yes.
Bonnie: You guys are a good fit for them. So what can they expect on the consultation call?
Laxman: Yeah, the consultation call, you know, I love to just get to know the physician, what their income source is. There's a list of 9 questions where it's almost like an onboarding call. We go through different PACS questions they have themselves and even go through a strategy session where they get a feel for what, what we can do, how we can work and what we can probably save. So it's a pretty comprehensive call, I would say, but
Bonnie: People will get value regardless of whether they actually end up working with you.
Dr. Mark: Oh yeah. Absolutely.
Bonnie: Yeah. Okay. So the link is wealthymommd.com/docwealth. That's DOCWEALTH. And that link will take you to basically a way to schedule an appointment.
Is it with you or Mark?
Laxman: It's with me. Yeah.
Bonnie: Oh, it's with you. Okay. Well, Laxman, thank you so much for your time, and I just loved how thoughtful you and Mark were about seeing this problem, solving it. I just love that entrepreneurial engineer mindset, and so I know this is a problem that many of my listeners have, and, you know, I'm glad to be able to suggest a resource. People are always asking me for recommendations and it's hard.
Like I don't, you know, the tax people I use is specifically, they only work with online businesses, for example, it's not going to apply to most positions. All right, Well, thanks so much for your time again.
Laxman: Yeah. Thank you so much for having us. This was great.
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