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  • The White Coat Investor The White Coat Investor 
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    Anonymous Post:

    I’m a full-time physician with a W-2 job and a telemedicine side gig. Between my w2 401k and solok I am able to max out my 56k contribution for 2019. My spouse is not currently working and we are looking to have a qualified joint venture solok, increase retirement savings so as to lower taxable income. The main issue is defining spouse’s job description/duties to qualify as a joint venture for telemedicine gig.spouse is a physician but not currently practicing.Does anyone have any experience with this sorta situation ? What duties can be delegated legally to meet QJV requirements.Any help will be appreciated

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #227879 Reply
    CordMcNally CordMcNally 
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    The bottom line is that you’re basically trying to “invent” a job for your wife to shelter more of your money. That’s going to be tough. At this point, what does your telemedicine gig consist of? You sign in and start seeing people? I think it’d be tough to justify a joint venture in that scenario. I’m also not an accountant so I could very well be overlooking something.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #227884 Reply
    Avatar Peds 
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    Didn’t someone ask this already?

    #227890 Reply
    Lordosis Lordosis 
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    Tech support?

    Secretary?

    Would’t she need to pay FICA negating the usefulness of this?

    “Never let your sense of morals prevent you from doing what is right.”

    #227893 Reply
    Avatar EntrepreneurMD 
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    For the QJV, both spouses have to materially participate in the business. If she isn’t I wouldn’t do it. You’ll have to file separate schedule C and schedule SE in addition to having a partnership agreement.

    However I agree with lordosis, that she can materially participate as IT for hardware and software, or a secretary for scheduling, or perhaps take care of the accounting/billing/contracting. It would be easier if she was doing telemedicine which is very flexible. If she’s not interested in practicing medicine or currently not licensed, she can consider starting a business she is interested in, which would both potentially increase household income and help her invest for retirement. Ultimately she has to earn income to take advantage of the benefits that come along with it.

    Looks like it’s only worthwhile if her income and share of profits is large enough that she can contribute materially to retirement accounts and SS so she can have financial security if anything were to happen to you and you can drop your household tax rate a bit.

    #227916 Reply
    jfoxcpacfp jfoxcpacfp 
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    1. In many states, any owner of a professional business must be licensed professionals.
    2. All of the above. Your wife would have to experience super-high returns on her investments (which we know is not possible over the long term) to overcome the additional cost of the FICA tax differential given that she would have a 15.3% expense versus your 2.9% expense.

    Better alternative? 11 Reasons You Need a Taxable Investment Account

    Edit – re-reading, see that she is a physician, but not practicing.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #227920 Reply
    Avatar G 
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    I should have known this wasn’t going to be a marijuana thread.

    #227923 Reply
    Avatar Peds 
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    #227927 Reply
    Avatar ZZZ 
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    ‘Spouse is a physician but not currently practicing.’

    I think I see an easier way to increase your retirement savings…

    #227934 Reply
    Avatar EntrepreneurMD 
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    1. In many states, any owner of a professional business must be licensed professionals.
    2. All of the above. Your wife would have to experience super-high returns on her investments (which we know is not possible over the long term) to overcome the additional cost of the FICA tax differential given that she would have a 15.3% expense versus your 2.9% expense.

    Better alternative? 11 Reasons You Need a Taxable Investment Account

    Click to expand…

    Johanna, for item #1 Many people start businesses that don’t have a professional license because it is not necessarily a “professional business”. I once read an article about a pediatrician earning about $90K/year selling clothes on her Ebay business. I’m sure you’re not saying something like that requires a professional license. Clearly if you are opening a business as a medical provider you must be licensed. I was referring to non-professional services, with the Ebay business noted here as an example.

    Regarding #2, by the logic of 15.3% vs 2.9%, that would mean I should never have started my business and remained an employee. But I think I understand what you are saying. I am earning much more as a business owner so it was worth it. However, if OP’s spouse does not materially add more household income with her contribution, by investing the profits as you suggest (assuming it’s not already done) would likely generate more income for them without increasing their FICA to 15.3%. Makes a lot of sense, especially given the long term power of compounding. I have some concerns OP’s spouse wouldn’t be contributing to SS (in their current situation), however if they are savvy with their investment accounts that can substitute for her future security so your recommendation would help there too. When the time comes, she will likely still be eligible for Medicare A premium free if her husband has been paying into the Medicare system for at least a decade, even if she hasn’t.

    Seems OP is trying to focus in on tax rate issues and while taxable investment accounts won’t help with this, it doesn’t mean this couple won’t still be ahead by making the investments and just paying the income taxes given the additional earnings. It’s also relatively more passive as she seems to value her time outside of work.

    Hope I didn’t get it all wrong. Told you I’m not well versed!

    I think OP’s question regarding his wife’s role in legally meeting QJV requirements may be best addressed by a tax attorney in conjunction with their CPA, to confirm the accuracy of the feedback in this string.

    #227945 Reply
    jfoxcpacfp jfoxcpacfp 
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    Johanna, for item #1 Many people start businesses that don’t have a professional license because it is not necessarily a “professional business”. I once read an article about a pediatrician earning about $90K/year selling clothes on her Ebay business. I’m sure you’re not saying something like that requires a professional license. Clearly if you are opening a business as a medical provider you must be licensed. I was referring to non-professional services, with the Ebay business noted here as an example.

    Click to expand…

    Understood, but this was a telemedicine side gig, which is why I specified “professional”. No problem with eBay, of course, since the peds is not doing business as a peds.

    Regarding #2, by the logic of 15.3% vs 2.9%, that would mean I should never have started my business and remained an employee. But I think I understand what you are saying. I am earning much more as a business owner so it was worth it.

    Click to expand…

    You are missing my logic. The issue is whether the non-working spouse should pay taxes at 12.4% on the $132,900 of income that her spouse has already paid that tax once on. Has nothing to do with you or any other self-employed or employed person who has already gone beyond the SS threshold. I believe it is a mistake for a high-earning spouse to employ a non-working spouse solely for a solo-k, which is essentially what is happening in this fact pattern.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #227947 Reply
    jfoxcpacfp jfoxcpacfp 
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    I have some concerns OP’s spouse wouldn’t be contributing to SS (in their current situation), however if they are savvy with their investment accounts that can substitute for her future security so your recommendation would help there too.

    Click to expand…

    Didn’t see this one on first go-round:

    • The wife will qualify for 50% of the husband’s SS and 100% after he (presumptively) passes first. Getting SS benefits is never a reason for the spouse of a physician to work – he or she is covered.
    • Even ex-spouses are covered if the marriage lasted at least 10 yrs and the claiming spouse d/n remarry before age 60.
    • If the working spouse dies early, the surviving spouse can claim SS bene’s bg at age 60.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #227993 Reply
    Avatar Hopeada 
    Participant
    Status: Physician
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    Joined: 03/05/2018

     

    Appreciate  the input from everyone who responded… looks like it won’t be worth it after weighing pros and cons. Plus, it’s difficult to invent a job in this situation.

    Apologies for double posting-posted but didn’t see the post so I requested an anonymous post.(1st time poster)

    ‘Interesting to note that everyone thought non working spouse was female… I agree this is the most common scenario 😂

    ‘of course, getting spouse to practice will certainly increase our household retirement savings-however hubby is an IMG who has had difficulty with matching into residency. He is currently doing observerships to increase chances of matching so We are still trying for this next go around-if anyone has any connections IN ANY FIELD, ANYWHERE in the continental USA-we are definitely open!

     

    #228108 Reply
    Lordosis Lordosis 
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    How long since med school?

    “Never let your sense of morals prevent you from doing what is right.”

    #228228 Reply

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