Tax FAQ for Physicians and Dentists

Often yes. Locum income paid on a 1099 usually has no withholding. If you expect to owe $1,000 or more for the year after withholding and credits, you generally need estimated payments or extra withholding from other income.

Generally yes for self-employed physicians and practice owners, when the premiums are ordinary and necessary business expenses. W-2 employees are treated differently, so confirm your situation with a professional.

Costs of continuing education related to your current practice are often deductible, including some travel. Keep the course agenda, receipts and a note of how the course relates to your practice.

An S corporation can reduce self-employment tax on profit above a reasonable owner salary, but it adds payroll and compliance costs. Model the result at your expected profit and check your state's rules first. See practice ownership and income.

Solo 401(k) and SEP IRA plans are common for self-employed physicians. Cash balance plans can allow larger contributions for established practices with steady income. The right choice depends on income, age and whether you have employees. See retirement planning.

The answer depends on the facts of the working relationship, including who controls how and when the work is done, who provides equipment, and how you are paid. Your contract and the IRS guidance on worker classification are good places to start, but a professional review is often needed.

No. Do not send patient information or protected health information through this site, by email, or through the sign-up form. Share any sensitive records only through secure channels agreed with your professional advisor.

Several taxes stack up. Beyond the regular brackets, an additional 0.9% Medicare tax applies to wages over $200,000 for a single filer, and a 3.8% net investment income tax can apply to investment income when income is above $200,000 single or $250,000 joint.

It can be. If you moonlight as an independent contractor you receive a 1099, no tax is withheld, and self-employment tax applies. If the extra work is as an employee, it comes on a W-2 with withholding. Plan estimated payments for the 1099 income.

The deduction is capped at $2,500 a year and phases out as income rises, so many physicians receive little or none. The income ranges adjust yearly, so check the current limits.

Forgiveness under Public Service Loan Forgiveness is excluded from federal income. Other forgiveness programs can be treated differently depending on the program and the year, so check before assuming a balance is tax-free.

Under current federal rules, employees generally cannot deduct unreimbursed work expenses. Self-employed physicians and practice owners can often deduct licensing, board certification and similar costs as business expenses.

Direct Roth IRA contributions are limited at higher incomes. Some people make a non-deductible traditional IRA contribution and then convert it. The pro-rata rule can make the conversion partly taxable if you hold other pre-tax IRA money.

Yes. Partners and S corporation shareholders are taxed on their share of the practice's income as reported on a Schedule K-1, even if the practice kept the cash for equipment or reserves.

Often yes. A 457(b) has its own contribution limit that is separate from the 403(b) or 401(k) limit, so some hospital employees can defer into both. A non-governmental 457(b) can expose your balance to the employer's creditors, so read the plan.

No, but they suit a specific profile: a high-earning owner with steady income who wants larger deductible contributions than a 401(k) allows. The plan needs an actuary, annual funding, and usually must cover staff.

Often, yes. Working in another state can create a nonresident return requirement there, and your home state usually taxes all your income with a credit for tax paid elsewhere. Track days worked in each state.

Self-employed physicians may qualify if the space is used regularly and exclusively as the principal place of business, including administrative work with no other fixed location. Employees generally cannot deduct a home office under current rules.

Commuting between home and your regular workplace generally is not. Travel between two work locations, or to a temporary work site, can be deductible, which matters for physicians covering several facilities.

The deal structure, how the price is allocated between goodwill and equipment, how the goodwill is amortized, whether you will be a partner or an employee, and the valuation. These choices change both your taxes and the seller's.

Resident pay is generally subject to FICA taxes. The Supreme Court upheld the Treasury rule treating full-time medical residents as employees rather than students for this purpose in Mayo Foundation v. United States (2011).