*$64,500 for those over the age 50 (in 2021)Ĭheck out these other helpful blog articles:ĪpolloMD Disclaimer: The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding federal tax penalties.
TAX WRITE OFFS FOR 1099 EMPLOYEES PROFESSIONAL
For more information about identifying the most effective 1099 deductions for physicians, contact your tax professional or the Financial Designs, Inc. These expenditures can add up to significant savings as you tally each amount.Īdditional strategies are available pursuant to individual circumstances. Health Insurance Premiums & HSAsĪs an independent contractor physician, you can deduct the money you spend on your health insurance premiums and the money you contribute to HSAs which also grow tax-free. Typically, the other financial benefits of being an independent contractor outweigh the fact that you have to pay more in Social Security/Medicare taxes. However, the IRS allows you to deduct 50% of this (essentially the “employer” portion) which can save you a few more thousand in taxes. Social Security & Medicare TaxĪs an independent contractor you have to pay more in “self-employment” tax because you have to pay Social Security/Medicare tax as the employee AND the employer.
TAX WRITE OFFS FOR 1099 EMPLOYEES FULL
A full list of deductible business expenses should be available through your financial advisor. Independent contractors may also deduct the cost of items such as licensing fees, cell phone bills, CMEs (including travel), scrubs, etc. If your primary office is at home (without an additional office space provided at the workplace), you can deduct your at-home office space as well as the commute to and from work. These items can add up, and it’s not uncommon to deduct $15,000 per year. Business ExpensesĪs an independent contractor physician, tax deductions begin with your business expenses. For specific QBI qualification guidelines, review details here or contact a FDI representative. Qualified Business DeductionĪs of 2018, 1099 physicians can qualify for a 20% pass-through deduction which can save you upwards of $15,000 in taxes in a year. By using these strategies, you can save over $100,000 in a tax-deductible capacity. If you want to further accelerate your retirement savings AND further shrink your tax bill, you can deploy strategies like hiring a spouse or using a Defined Benefit Plan. If you live in a state that requires you to pay state income tax, there would also be additional savings.Īnd the good news – you don’t have to stop there. This means if you are in the 24% tax bracket, you could save over $13,920 in federal taxes alone (if you max-out your retirement contribution).
Retirement SavingsĬontributions of up to $58,000* per year to a tax-deductible retirement account like a SEP IRA or Individual 401(k) are permitted for independent contractor physicians. Start with these categories, following specialized advice from the professionals at Financial Designs, Inc. However, careful considerations can lead to dramatic savings once you break it all down into manageable steps. There can be several moving parts to building a tax plan as an independent contractor physician. 5 Ways Independent Contractors Can Shrink Their Tax Bill In Partnership with Financial Designs, Inc.
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