I was reading a post on Newdocs.com and saw your reply regarding new doctor compensation:
“Good topic. One way new doctors can find out what the compensation is like in their specific area is to seek out the dental specific professionals, like attorneys, CPAs, consultants, etc. who represent dentists and know what’s going on.
They can also provide some great insight on how to approach compensation within the agreement, getting it all in W-2 compensation isn’t the best way. See if the owner is willing to get creative, it’ll be a win win for both of you.”What are some of those creative ideas? This sounds interesting.
Barry summarized it pretty well. If you’re an employee non-owner, the owner will usually only cover certain benefits like malpractice, maybe health insurance and maybe up to $1,500 of dues and licenses. Therefore, any other professional expenses that an employee incurs that might be deductible on their individual return are paid with after-tax and after payroll-tax dollars. Even if you can claim them on your individual return, you must be itemizing and they have to exceed 2% of your AGI to even begin to benefit AND you may be hit with AMT.
Therefore, IF you have expenses like business meals and entertainment, business gifts, CE, business travel, business use of the vehicle, cell phone use, and on and on, you’re better off asking your employer to pay for those items in lieu of W-2 compensation. As Barry said, not only do you save income taxes and payroll taxes and avoid the whole AMT issue, the employer also saves payroll taxes as well.
So the “creative” part has to do with finding those business related expenses that you’re paying with after tax dollars and seeing if your employer will pay them in lieu of your taxable wages.