Physician Tax Strategies

Tax strategy guide · Updated 2026

Physicians often have more moving parts than the typical taxpayer: a salary from a hospital or group, extra shifts paid on a 1099, possibly a practice interest, and sometimes income from teaching, consulting or speaking. The strategies below help bring those pieces into one plan.

Start with the income map

List every income source for the year and how each is reported. W-2 wages have tax withheld automatically. 1099 income usually does not, and self-employment tax may apply to it. Without a map, it is easy to under-withhold and face an underpayment penalty.

Estimated taxes on 1099 and side income

Estimate the tax on non-withheld income and pay it through quarterly estimated payments, or increase withholding on your W-2 pay to cover it.
Safe-harbor rules based on prior-year tax can protect you from penalties even if the current year's income is higher. Check the current rules each year.
Set aside a percentage of every 1099 payment as it arrives. Locum work often pays without withholding and is easy to spend.

Expenses physicians commonly deduct

Expense	Typical treatment	Documentation tip
Malpractice premiums	Generally deductible for self-employed physicians and practice owners	Keep premium notices and payment records
State licensure and board fees	Generally deductible as ordinary business expenses	Save receipts and renewal notices
CME and conferences	Deductible when related to your current practice; travel rules apply	Keep agenda, registration and a note of the business purpose
Professional dues and journals	Generally deductible when required or related to the practice	Keep invoices and membership confirmations
Home office	Deductible for a dedicated, regularly used space if you qualify	Measure the space and keep a floor plan
Locum travel	Deductible in some cases; rules depend on your tax home and the length of assignments	Keep a travel log and lodging records

Whether a given expense is deductible depends on your facts, employment status and tax home, so confirm with a professional before relying on one.

Employed or self-employed? Many expenses that are deductible for a self-employed physician are not deductible for a W-2 employee under current federal law. If you have both kinds of income, track them separately from the start.

Timing decisions

In the years when income is unusually high or low, the timing of bonuses, extra shifts and deductible purchases matters more. A mid-year projection tells you whether to accelerate deductible expenses, delay income where your employment agreement allows, or fund retirement accounts before year-end.

Checkpoints for physicians

January: review last year's return for missed deductions and confirm the current year's withholding and estimated payment plan.
June: project full-year income from every source and revise estimated payments.
September: review retirement plan contributions and any practice equipment or capital purchases.
December: make final timing decisions and confirm that all year-end contributions and payments are completed.

A CPA who works with physicians can coordinate all of this in one plan. PremCPA.com provides professional CPA services, and SmallTax.com offers tax help for small businesses that you may find useful for practice-related questions.

General educational information only, not tax, legal or investment advice. Deductibility depends on individual facts and current law. Consult a qualified tax professional before acting.