Help me plan for medical school

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VooPhiladelphia
Posts: 7
Joined: Tue Nov 01, 2022 4:01 pm

Help me plan for medical school

Post by VooPhiladelphia »

Hello,

I am headed to med school in the fall. I am posting here to get recommendations on how to best minimize expenses and maximize tax advantages for the next 4 years. Here is what I have so far.

Ideas to minimize expenses:
1. Compare health insurance premiums/plan coverage at my school and at my state’s exchange. I am a healthy individual at the moment, so I plan to pick the plan with low premiums and low coverage.

Ideas to minimize taxes:
1. For each year of med school I will deposit 17K into a 529 and then immediately pull the money out to pay for school. This will allow me receive a state tax deduction (~$500 in savings in PA). I realize I am very fortunate to be in this position.
2. Tax gain harvest investments to reset cost basis in tax year 2024. Since my income will be close to 0 for the next 3-4 years, I can leverage the 0% LTGC rate up to ~54k (in 2023 0% LTCG rate for a single filer is $41,675 + standard deduction). I will try to do this each year of medical school as long as I am in the 0% LTCG tax bracket.
3. I think am I eligible for the lifetime learning credit during all 4 years. Are there other tax deductions you are aware of?
soxfan10
Posts: 333
Joined: Wed Jan 21, 2015 9:38 pm

Re: Help me plan for medical school

Post by soxfan10 »

If you have pre-tax accounts, do Roth conversions of at least the standard deduction each year. Consider doing it in the 10% and 12% brackets as well.
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Watty
Posts: 28860
Joined: Wed Oct 10, 2007 3:55 pm

Re: Help me plan for medical school

Post by Watty »

If you have not seen it yet be sure to check out the white coat investor web site which is run by a regular poster here who is an emergency room doctor.

https://www.whitecoatinvestor.com/

They also have a forum there which might get you more specific responses by people who have recently been through medical school.
snowday2022
Posts: 721
Joined: Sun Jan 16, 2022 1:48 pm

Re: Help me plan for medical school

Post by snowday2022 »

This is all chump change compared to studying hard to get into a desirable specialty that fits your interests and lifestyle goals and pays well.
YeWill
Posts: 83
Joined: Sat May 20, 2023 1:21 am

Re: Help me plan for medical school

Post by YeWill »

The best thing you could do for yourself for the next 7 to 8 years is survive training and make life as easy as possible. That plus choosing the right speciality is more important than any financial optimization you do during this time.
Young Boglehead
Posts: 321
Joined: Wed Jan 02, 2019 4:11 pm

Re: Help me plan for medical school

Post by Young Boglehead »

Try to get on Medicaid if your state allows it, that will save you a bunch of money. And if you qualify for it check to see if there are other things you qualify for like discounted internet.

Unfortunately they’re ending the Covid changes for SNAP this year so you won’t qualify for that.
toddthebod
Posts: 5737
Joined: Wed May 18, 2022 12:42 pm

Re: Help me plan for medical school

Post by toddthebod »

VooPhiladelphia wrote: Sat Jun 03, 2023 11:08 am Ideas to minimize taxes:
1. For each year of med school I will deposit 17K into a 529 and then immediately pull the money out to pay for school. This will allow me receive a state tax deduction (~$500 in savings in PA). I realize I am very fortunate to be in this position.
2. Tax gain harvest investments to reset cost basis in tax year 2024. Since my income will be close to 0 for the next 3-4 years, I can leverage the 0% LTGC rate up to ~54k (in 2023 0% LTCG rate for a single filer is $41,675 + standard deduction). I will try to do this each year of medical school as long as I am in the 0% LTCG tax bracket.
3. I think am I eligible for the lifetime learning credit during all 4 years. Are there other tax deductions you are aware of?
What income will you have to take advantage of these tax deductions/credits?
Topic Author
VooPhiladelphia
Posts: 7
Joined: Tue Nov 01, 2022 4:01 pm

Re: Help me plan for medical school

Post by VooPhiladelphia »

toddthebod wrote: Sat Jun 03, 2023 2:06 pm
VooPhiladelphia wrote: Sat Jun 03, 2023 11:08 am Ideas to minimize taxes:
1. For each year of med school I will deposit 17K into a 529 and then immediately pull the money out to pay for school. This will allow me receive a state tax deduction (~$500 in savings in PA). I realize I am very fortunate to be in this position.
2. Tax gain harvest investments to reset cost basis in tax year 2024. Since my income will be close to 0 for the next 3-4 years, I can leverage the 0% LTGC rate up to ~54k (in 2023 0% LTCG rate for a single filer is $41,675 + standard deduction). I will try to do this each year of medical school as long as I am in the 0% LTCG tax bracket.
3. I think am I eligible for the lifetime learning credit during all 4 years. Are there other tax deductions you are aware of?
What income will you have to take advantage of these tax deductions/credits?
I have been working for a decade prior to school so I have limited savings. If I were to realize 5k-10k in gains each year, I would have some state tax liability. Unlikely i will have federal tax liability.
Rex66
Posts: 2955
Joined: Tue Aug 04, 2020 5:13 pm

Re: Help me plan for medical school

Post by Rex66 »

It’s been a long time since I’ve been in medical school but our school plans allowed easy access at the hospital/clinics and that was very useful
TXDoc21
Posts: 94
Joined: Tue Dec 15, 2020 10:02 am

Re: Help me plan for medical school

Post by TXDoc21 »

snowday2022 wrote: Sat Jun 03, 2023 12:53 pm This is all chump change compared to studying hard to get into a desirable specialty that fits your interests and lifestyle goals and pays well.
+1

Study hard and work on figuring out a specialty that allows for longevity. A little bit lower paying but working for a bit longer may be better since you are starting later in life. Keep an open mind. Good luck!
toddthebod
Posts: 5737
Joined: Wed May 18, 2022 12:42 pm

Re: Help me plan for medical school

Post by toddthebod »

VooPhiladelphia wrote: Sat Jun 03, 2023 3:15 pm
toddthebod wrote: Sat Jun 03, 2023 2:06 pm
VooPhiladelphia wrote: Sat Jun 03, 2023 11:08 am Ideas to minimize taxes:
1. For each year of med school I will deposit 17K into a 529 and then immediately pull the money out to pay for school. This will allow me receive a state tax deduction (~$500 in savings in PA). I realize I am very fortunate to be in this position.
2. Tax gain harvest investments to reset cost basis in tax year 2024. Since my income will be close to 0 for the next 3-4 years, I can leverage the 0% LTGC rate up to ~54k (in 2023 0% LTCG rate for a single filer is $41,675 + standard deduction). I will try to do this each year of medical school as long as I am in the 0% LTCG tax bracket.
3. I think am I eligible for the lifetime learning credit during all 4 years. Are there other tax deductions you are aware of?
What income will you have to take advantage of these tax deductions/credits?
I have been working for a decade prior to school so I have limited savings. If I were to realize 5k-10k in gains each year, I would have some state tax liability. Unlikely i will have federal tax liability.
The lifetime learning credit is non-refundable. I assume the PA tax deduction is useless without income to deduct from.
bornloser
Posts: 197
Joined: Sat Mar 24, 2012 7:16 am

Re: Help me plan for medical school

Post by bornloser »

It's actually not "chump change". Minimizing debt, understanding the tax system, reading Bogleheads forum AND studying hard to have residency options are both important. Best thing I did was live like a pauper in medical school, start IRA's with the first monies from residency, live modestly for first few years practice (let the wheat in the barn start compounding). The fact that the OP understands and is thinking about these things will put him in a small circle of practicing physicians who are not in the physicians lounge eating the free donuts at age 80.
snowday2022
Posts: 721
Joined: Sun Jan 16, 2022 1:48 pm

Re: Help me plan for medical school

Post by snowday2022 »

bornloser wrote: Sat Jun 03, 2023 5:24 pm It's actually not "chump change". Minimizing debt, understanding the tax system, reading Bogleheads forum AND studying hard to have residency options are both important. Best thing I did was live like a pauper in medical school, start IRA's with the first monies from residency, live modestly for first few years practice (let the wheat in the barn start compounding). The fact that the OP understands and is thinking about these things will put him in a small circle of practicing physicians who are not in the physicians lounge eating the free donuts at age 80.
TGH and 529 contributions with no income, is marginal BH principles compares to LBYM, avoid debt etc. I am very glad I didn’t live like a pauper when in training, since I was working like one. But I worked hard and now I easily clear 600K plus two years out and in one quarter I save more in taxable than I could have possibly saved in years of training. Be smart with your money when you get it. When you don’t have much of it the choices are marginal.
Big Dog
Posts: 4608
Joined: Mon Sep 07, 2015 4:12 pm

Re: Help me plan for medical school

Post by Big Dog »

check with your med school/Uni for health plans that are acceptable for students. (They might not approve a 'low benefit' plan.)
TacoLover
Posts: 655
Joined: Wed Feb 01, 2023 9:43 am

Re: Help me plan for medical school

Post by TacoLover »

A few things from someone around 30 years out…

Obviously work hard. Duh.

You are currently and for the next 7-10 y in the lowest tax bracket you’ll ever be in including retirement. That means first maximize your Roth. And second - run the numbers and see if it makes sense to maximize your regular brokerage contributions and not your retirement (401k) contributions. For residency and fellowship your tax rate is low. Unless your residency is contributing money to 401k which it will not, you are putting low tax dollars in your 401k and getting taxed at a much higher tax rate at retirement. This is something I didn’t realize when I was young.

Buy human anatomy made ridiculously simple.

If you are considering orthopedics buy hoppenfeld surgical approaches.

If you are considering surgery I am about to tell you the best advice you will get in your professional life by far:

If you are considering surgery, get a bunch of blank notebooks. Before every procedure, look up several textbooks and write down with pictures how to do the procedure. Give yourself a lot of space between the lines. Then go to the hop in Fallbrook and write down with pictures the appropriate approaches, and what you expect to see at each stage. Leave a lot of space between the notes in the pictures. then read a few papers in at what new information each provides in your notes. Leave a lot of space.

Review before you scrub in to your procedure.

After the procedure, compare what you learned from the book with what you saw in real life. Write down all the things you’re attending did differently and if it seemed a good choice or a bad choice. Write down at the appropriate section in your notes any complications that occurred and how your attending got out of it.

Do this for every single procedure. Keep different notes based on different sub specialties. For example, when notebook for spine, and one notebook for sports, and one notebook for knee replacements and so on .

Before every time you do the procedure again review your comprehensive notes and add what new information there is.

This will provide not only an organized framework, but also every time in residency and fellowship, and even as an attending, it will be as if you just came fresh from having perform the procedure. Your learning trajectory will be vertical. 30 years from now you will look back and you’ll say of everything I learned about everything that guy in Bogleheads provided the greatest help ever in my professional career.
TacoLover
Posts: 655
Joined: Wed Feb 01, 2023 9:43 am

Re: Help me plan for medical school

Post by TacoLover »

I forgot - I practice in California. When i left fellowship people chose the best job they could. Strongly consider the consequences of where you choose to live. I am in California and I would strongly consider a more responsible place if I knew then what I know now. I’m terms of taxes, government choices, homelessness, government choosing not to address traffic, government choosing not to address water needs and electricity needs etc. consider how the state is run in addition to the job.
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