Background

A pediatrician and spouse with W-2 income of $250,000 and rental properties generating an additional $25,000 of taxable income each year were paying $65,000 in taxes annually. The spouse had chronic medical expenses that cost $15,000 per year out of pocket, that were non-deductible due to their income. The client also spent several thousand each year on continuing education, travel, and licensure expenses that were not deductible. The client wanted a 5-7 year retirement plan, has a conservative investment outlook, and wanted comfort that their assets would cover both retirement needs and medical care.

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Fortunately, they called one of our Managing Directors at Redwood Tax Specialists!

The Plan

Based on the client’s preferences, cash flow needs, and budget, we designed their custom tax plan with:  

1. ​a newly formed professional association employing the pediatrician, contracted with the previous employer  

2. designed a retirement savings plan to contribute $110,000 annually into conservative investments to protect principal 

3. enhanced health care coverage and elected a tax-deductible medical reimbursement plan paid for by the association implemented tax-deductible travel and education reimbursement plans paid for by the association.

The Results

An overall 80% tax reduction with combined Federal & State taxes reduced from approximately $32,672 the very first year.  Then we saved them an additional $12,712 the second year.