Cutting $40K in Taxes for a Growing Consulting Business and Physician Household

The Challenge: Managing Rising Income and Complex Tax Dynamics

Emily, an anesthesiologist in residency, carried a significant amount of student loan debt. She had been offered a position at a nonprofit hospital, which qualified her for Public Service Loan Forgiveness (PSLF) - meaning her loans could be forgiven after 10 years of qualifying payments.

Her husband, David, was a consultant earning over $200,000, which complicated matters. Filing jointly would have drastically increased Emily’s required monthly loan payments under her income-driven repayment plan. Those higher payments would have gone toward debt scheduled for forgiveness - effectively throwing away cash flow.

At the same time, David’s consulting business lacked tax efficiency as a single-member LLC, and Emily’s pending salary increase meant the household was on the verge of higher brackets, phaseouts, and reduced deductions.

The couple needed a cohesive plan that preserved cash flow, maximized PSLF benefits, and improved the tax efficiency of David’s business - all while laying the foundation for retirement savings and long-term growth.

Gelt’s Strategic Approach: Aligning Tax Planning with Long-Term Goals

Household-Level Strategies

• Filing Status Optimization for Public Service Loan Forgiveness (PSLF): Recommended filing as Married Filing Separately to keep Emily’s PSLF payments at the minimum. This preserved household cash flow during residency, effectively postponing repayment until forgiveness while still qualifying under the program.
  
• Roth Conversions: Identified low-income years as opportunities (while Emily is in residency) for Roth IRA and Mega Backdoor Roth contributions.
  
• Tax-Loss Harvesting: Planned for up to $3K annually in deductible capital losses.
  
• Charitable Giving: Structured non-cash donations to maximize deductions.
  
• HSA Contributions: Recommended enrolling in a high-deductible plan for triple tax benefits.
  
• Mortgage & Home Planning: Advised on deduction limitations and impact of home office deduction on the mortgage and SALT limitations.
  
• Children’s Savings & Education: Directed some savings into 529 plans, which could eventually roll into Roth IRAs after 15 years if not fully used.

Business-Level Strategies

• S-Corp Election: Transitioned David’s LLC to an S-Corp, splitting income into salary and distributions. This reduced payroll tax exposure and unlocked ~$9–10K in annual savings.
  
• Business Expense Optimization: home office vs Augusta Rule, software & subscriptions, meals, travel, equipment, and more.
  
• Solo 401(k): Encouraged contributions (employee contributions + profit-sharing plan, up to $69K in 2024) lower current brackets (for Married Filing Separately) and create a tax efficient wealth vehicle.
  
• QBI Deduction: Evaluated eligibility for the 20% Qualified Business Income deduction once as income was lowered below the QBI SSTB phaseout threshold.
  

Results & Implementation Roadmap

With Gelt’s guidance, Emily and David are now positioned to:

• Save approximately $40K annually through a combination of S-Corp structuring, deductions, and household planning
  
• Keep Emily’s PSLF payments at the minimum, preserving cash flow while staying on track for full forgiveness
  
• Maximize retirement growth with Roth conversions, Solo 401(k), and employer-sponsored accounts
  
• Reduce taxable income through HSA contributions and charitable giving
  
• Build a flexible tax structure that supports both career growth and family planning
  

Conclusion: A Coordinated Strategy for Growth and Savings

By aligning business and household planning, Emily and David created a tax strategy that not only saved them approximately $40,000 a year, but also maximized the value of Emily’s PSLF eligibility. This approach let them preserve cash flow during residency, invest for the future, and scale David’s consulting business without unnecessary tax drag.

When we first looked at Emily’s student loans and my business income, it felt like there wasn’t much we could do, taxes were just going to be huge no matter what. Gelt showed us that with the right structure, we could keep Emily’s loan payments at the minimum, save about $40,000 a year in taxes, and finally plan for both retirement and our kids’ future without feeling stretched thin.

- Emily & David