Are you ready to move from high-income to high net worth? As dentists, we take in a lot of annual income, and because of that, we have plenty of wealth-building opportunities, but also plenty of encounters with Uncle Sam. Luckily, Christian Allen and Rod Zabriskie from Money Insights came together to share some valuable wealth-building avenues and tax strategies with the Nifty Thrifty group.
Using tax code, the Money Insights team can create permanent tax-saving solutions. Instead of traditional tax deferment, engaging in particular activities that our government has set aside for tax breaks to stimulate the economy creates lasting savings for dentists. In our chat, Christian Allen discussed several alternative tax strategies, such as conservation easement.
Conservation easement involves buying a piece of property dedicated as a green space and promising never to mine or develop the property. This creates the opportunity to collect a large tax deduction on an asset, preserving your wealth. This is best done through a forwarding-thinking and trusted advisor. Unfortunately, the majority of CPA’s have to work backward to prevent dentists from paying towering taxes immediately, deferring those tax payments for later in one way or another. However, discovering an alternative CPA who can proactively work to reduce the required taxes in total would create permanent tax savings.
Moving away from traditional qualified planning and defined benefit plans, investing in real estate, and self-insuring your business can be some powerful first steps in increasing tax-savings now. The former allows for savings during a 27.5-year depreciation cycle, and the latter allows dentists to move ordinary income into capital gains. This type of maneuver could bring a 40% tax rate down to a 20% tax rate.
The duo at Money Insights did note that these tax strategies are not for everyone. Having the right person putting it together can offer lots of benefits, but no matter what, your particular situation determines what is best.
For those of us just starting out on our wealth-building journey, Christian Allen and Rod Zabriskie recommend three key principles:
- Plan your tax strategies in advance.
- Save. Create a financial strategy allowing you to save about 20% of your income. However, before saving for your future, it’s important to also create an emergency fund for unexpected circumstances as well.
- Move into the alternative investment space. Create an opportunity fund for investments, and find the right advisors for implementation. Money Insights is able to point folks to operators who can help dentists with this.
Grow and preserve your wealth by first evaluating and educating yourself about financial planning. Then, find the right people to help you implement a wealth-building strategy. Discover more about how you can kickstart reducing your taxes and building wealth with our Money Insights Nifty Thrifty Deal below!
Find Out About:
- Money Insights’s advice on navigating things with your CPA
- How understanding tax code can save you thousands in taxes
- How to transition from high income into high net worth
- Go to www.moneyinsights.net/nifty for a free e-book called “Money Insights for Dentists”. Get the F3 score that will give you a good idea of where you are financial. If you want to learn more or find out specific strategies that can work for you, schedule a consult with their team.
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