Q: What will be different for spine surgeons after the tax cuts expire?
Andrew Schrage: One thing that will be different for spine surgeons should the tax cuts expire is that they will pay more in Medicare payroll taxes if they earn more than $200,000 as an individual or $250,000 if they file jointly with a spouse. They could also face a significant reduction in Medicare payments depending upon how the fiscal cliff issue is resolved. This reduction is normally averted because of annual legislation, but it's not so clear that this legislation will be part of the fiscal cliff fix. If it isn't, Medicare payments for spine surgeons and all practitioners could decrease by as much as 25 percent.
Q: What are the smartest moves for spine surgeons to consider before the Bush Tax Cuts expire?
AS: One idea to consider right now is to reshuffle your investment portfolio. With the looming tax hikes, you want your investments that are most tax efficient, such as stocks and bonds that don't pay dividends, in taxable accounts. Investments that have a history of paying out significant dividends are best placed in accounts that are tax-deferred. If a traditional IRA is part of their portfolio, spine surgeons should consider converting it to a Roth IRA. That way, they would be paying taxes on their account now instead of in the future, when rates are almost sure to be higher. Gifting money to relatives can also decrease a spine surgeon's tax burden, as long as it's beneath the $13,000 limit for 2012.
Q: What impact will new tax rates have on spine surgeons and their practices?
AS: The new tax rates could very easily cause spine surgeons to raise their prices. Additionally, there is also a new tax on medical devices that could cause spine surgeons to raise their rates even more, though it's still unclear which medical devices will be subject to the new tax.
On a more personal level, the new tax rates could cause them to shift their investing perspective. Generally, surgeons have enough disposable income to put their money in more illiquid investments, namely venture capital. With the coming tax increases, spine surgeons may be more likely to invest in liquid assets in case their income is negatively affected as a result of the tax increases.
Q: How can they lighten the blow from potential new tax rates in the future?
AS: Spine surgeons should look to increase their compensation as much as possible this year. For instance, take year-end bonuses before December 31 if possible. Another idea is to defer expenses that may have been paid at the end of this year to the beginning of 2013. Surgeons can also delay the purchase of new equipment until next year in order to reduce taxable income.
Q: Where can spine surgeons turn to optimize their financial situation?
AS: The best bet for spine surgeons looking to optimize their financial situation post-fiscal cliff is to enlist the help of a certified financial advisor. These professionals can offer specific and actionable advice on the exact things spine surgeons can do now and into the future to weather the storm. The best place to look for one is the Financial Planning Association website.
More Articles on Orthopedics:
10 Points on Orthopedic Surgeon Compensation
6 Ongoing Challenges for Spine Surgeons
50 Spine Surgeons on the Move in 2012
What Orthopedic Surgeons Can Expect After Bush Tax Cuts Expire: Q&A With Andrew Schrage FeaturedWritten by Laura Dyrda | Thursday, 27 December 2012 16:43
Andrew Schrage of Money Crashers discusses what orthopedic surgeons can expect after the Bush Tax Cuts expire and the smartest financial moves heading into next year.Last modified on Thursday, 27 December 2012 17:44
© Copyright ASC COMMUNICATIONS 2016. Interested in LINKING to or REPRINTING this content? View our policies here.
Most Read - Spine
- 22 spine surgeon leadership awards | 2016
- MIS spine's promising future — Key insights from SMISS President Dr. Greg Anderson
- Managing chronic back pain: 6 things to know about National Pain Strategy
- AANS appoints Dr. Frederick Boop president — 7 highlights
- Surgeon entrepreneur: Dr. Kern Singh's quest to make lateral spine surgery more accessible
Top 40 Articles from the Past 6 Months
- 336 spine surgeons to know — 2016
- Rumors of a Stryker acquisition of Smith & Nephew swirl once again: 6 key notes
- Google and Johnson & Johnson to form new surgical company — 4 highlights
- Medtronic, Stryker, Zimmer Biomet, DePuy Synthes, Smith & Nephew: Who had the best 2015? 32 things to know
- Did Loma Linda's orthopedic device rep-less strategy work? 5 things to know
- 5 huge reputation management mistakes for surgeons
- Stryker director sells 18k shares, following Smith & Nephew acquisition rumors: 7 points
- Is the Johnson & Johnson job cut an ominous sign for the medical device industry? 5 key thoughts
- Smith & Nephew acquires Blue Belt Technologies — Will Stryker make its move soon? 5 key notes
- Justice Department investigates pain compounding cream for $500M potential fraud: 5 things to know
- Physician receives second-degree murder sentence for overprescribing pain medication: 6 key points
- Population health on a budget: How one orthopedic surgeon succeeded in Chicago's most impoverished neighborhoods
- Looking ahead to 2016: What excites spine surgeons most?
- 5 most common reasons orthopedic surgeons are sued
- 32 hospitals to pay $28M in spine surgery false claims settlement: 5 things to know
- 10 spine, neurosurgeons on the move in January 2016
- North Carolina physician group creates orthopedic bundled payment system — 5 takeaways
- Dr. James Andrews #5 among richest doctors in the world: 6 points
- Dr. Robert Blok joins Laser Spine Institute — 4 key points
- 5 ways big data will affect healthcare providers in 2016 & beyond
- 5 things to know about wearable technology in medicine
- Zimmer Biomet, Stryker, J&J & more: 26 key notes — AAOS edition
- 22 spine surgeon leadership awards | 2016
- Stryker, Titan Spine, ConforMIS & more: 16 key notes
- Surgical tech sues Yale-New Haven Hospital surgeon after OR altercation — 5 key notes
- Orthopedic surgeons generate $2.7M for affiliated hospitals; 5.5 times what they make — 5 survey findings
- CJR bundles to pay $25k per episode: 8 statistics on cost breakdown
- Bundled payments, consolidation & more: How OrthoVirginia is building a future-facing empire
- The best way to prepare for the future in spine: Dr. Hyun Bae
- 15 statistics on orthopedic surgeon starting salaries
- From cost to patient care — The many ways orthopedic bundled payments help hospitals
- Top 10 highest-earning physician specialties — Orthopedics leads for 6th consecutive year
- Beyond the device: How DePuy Synthes is innovating in orthopedic & spine technology
- 6 statistics on orthopedic surgeon compensation — Which practice setting pays most?
- 13 statistics on neurosurgeon salary in 2016
- The entrepreneur mindset: How an MBA opened doors for one spine surgeon's practice
- Orthopedics and spine — 6 trends for 2016
- The growth of outpatient spine — 9 Key Points
- Top 5 EHR vendors to partner with in 2016
- Dr. Kevin Pauza unsurprised with Tiger Woods' slow back surgery recovery: 5 insights