Accountant for Doctors: 5 Tax Moves to Save Six Figures

Kimberly Green | 2025-05-13

Mixing W-2 and 1099 income complicates taxes—specialized CPAs cut six figures in over-withholding. Section 179, bonus depreciation and cash-balance plans are the three biggest doctor tax levers. Start vetting medical CPAs 6-12 months before buying new equipment or changing practice structure. Physicians earn high W-2 wages plus 1099 moonlighting income, often across state lines. The IRS notice-letter rate for doctors runs 1.8 × the national average (Medscape Physician Compensation Report 2024). Choosing an accountant who speaks “medical” can save six figures a year. Compare vetted physician-focused CPAs on Sam’s List! Written by Kimi, Co-founder, Sam’s List Why Doctor Finances Are Different • Multiple entities (PC, PLLC) and moonlighting 1099s • High malpractice premiums demand unique deductions • Large equipment purchases depreciate fast • State non-competes drive practice-buy-in timing Five Critical Services Your CPA Should Provide 1. Entity & Reasonable-Salary Mix S-corp owners must set “reasonable compensation” that survives IRS scrutiny (3121). Example: A Solo Orthopedist, cut payroll taxes $28K by lowering W-2 pay to $195K and taking the rest as distributions—well within IRS safe harbor. 2. Section 179 & Bonus Depreciation for Equipment 2025 bonus drops to 60 % (IRC168(k)); timing purchase matters. Example: Using IRS Pub 946, a dentist wrote off $240K and hired a hygienist with the cash-flow boost. 3. 199A Deduction for Group Practices Professional-service income phases out at $232 K single / $464 K joint (2025). Example: A three-doctor ENT practice split ancillary-service revenue into a management LLC, preserving the 20% deduction. 4. Defined-Benefit or Cash-Balance Plans At $500 K+ earnings, a cash-balance plan allows $200K pre-tax contributions (IRS Notice 2014-5). Example: A doctor used the plan to fund a taxable brokerage DCA strategy after maxing the plan shelter. 5. Multi-State & Foreign Income Compliance Traveling surgeons trigger NY “convenience of employer” tax and CA sourcing rules (NY TAM 16-5). Example: Quarterly withholding prevents April surprises. Red Flags • “We treat medical the same as any small business.” • No malpractice-premium analysis. • Ignores Medicare cost-report overlaps. Readiness Checklist ☐ Separate entity for 1099 income ☐ Equipment schedule aligned with bonus-depreciation phase-out ☐ Cash-balance feasibility study complete ☐ Multi-state estimated taxes set FAQ Should I choose cash or accrual accounting...

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