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A N O T H E R T A X F I L I N G P E R I O D is behind you — assuming you did not ex tend t he f i l i ng of your returns. You may be experiencing sticker shock from your total tax liability for the year — in particular, the taxes calculated on forms 8959 and 8960. These are the 0.9 percent additional Medicare Tax on wages and the 3.8 percent tax on invest- ment earnings that were part of the ACA. If you are looking for ways to reduce these as well as your traditional income taxes, consider the following. The 0.9 percent Medica re Ta x is assessed on your Medicare wages in excess of $200,000 (single) and $250,000 (married). To reduce this tax, you must look for ways to reduce your Medicare wages. This would include deferring compensation into a retirement plan. While your 401(k) contributions are not a reduction to Medicare wages, employer contributions such as employer matching, profit sharing, cash balance and defined benefit contributions are excluded from Medicare wages. Qualified retirement plans have a further benefit in that most are good asset protection vehicles. Other benefits through your employer include health savings contributions (high-deductible health insurance) or f lexible spending account contributions (traditional deductible health insurance), which are also excluded from Medicare wages. The 3.8 percent ta x on investment ea rnings is a n additional tax above your ordinary federal income tax on investment earnings. This tax comes into play when modified adjusted gross income exceeds $200,000 (single) or $250,000 (married). The tax is calculated on earnings from interest, dividends, capital gains or losses, annuities, royalties, rents and passive activities, but not income from the ordinary course of an active trade or business. Minimizing income in these areas will help reduce this tax liability. Items to be considered to minimize this tax include use of tax-exempt investments such as municipal bonds, securities that emphasize growth and pay little or no dividend, offsetting capital gains with capital losses, and ma ximizing deductions against rent, royalty and passive income. You can increase the ta x benefit of your charitable contributions by contributing appreciated securities, instead of cash, to the charity. The capital gain on the security is not taxable, so it is not subject to ordinary federal income tax or the investment tax. The charitable contribution deduction is the trading value of the stock on the date of contribution. You can deduct up to 30 percent of your adjusted gross income in this manner. If you have income from an Ohio-based business, take advantage of the Ohio Small Business Ta x Deduction, which allows you to reduce Ohio taxable income by 50 percent (in 2013 and 2015) or 75 percent (in 2014) of up to $250,000 of Ohio net business income. Always talk to your tax professional before entering in transactions to structure the arrangement for the best tax outcome. Martha S. Bethea is a certif ied public accountant and the Managing Director in charge of the Medical Practice Management Group of CBIZ/MHM LLC in Akron, Ohio. ■ By Martha S. Bethea, CPA Ta Pain +++++++++++++++++++++++++ + + + + +++++++++++++++++++++++++ ❯❯ BUSINESS SECTION ❯❯ 2 0 1 5 M AY/J U N E ■ M D N E W S . CO M ■ MD NEWS Cleveland/Akron/Canton | 2 5