In the row to serve businesses around California and Texas, SG INC CPA often comes across many questions. One of them is what are some viable physician tax deductions? Many tax deductions exist for Physicians who earn millions of dollars in income or below. Our tax consultants bring some legal ways through which you can save up taxes on your income. No matter if it is coming in from a side gig or your entire income, we have covered some tips in this guide.
Which Physicians Are Eligible For Tax Write-offs?
Physicians invest their time and money to earn the riches they deserve. IRS imposes taxes on physicians who have professional medical licenses to check up on patients. Physicians with taxable practicing licenses fall under the IRS list of taxable professions.
They must pay taxes on the salary or fee they earn. Even if they get new patients aside from their designated job, they’ll have a side gig and side gig is also taxable. They have their primary role as a W2 Physician but also have this side gig. And we’ll take a look at their Schedule C. It’s their income that might be right; they’re missing something.
Tax Deductions for Physicians
We know your time is important, just as ours is. So, without any further delay, let’s move on to Tax Deductions for Physicians. These tips will help save physician tax deductions.
1. Home and Office Deductions
First up is one of the most recommended Tax Deductions for Physicians. It is a home office deduction. Now, the keys here:
- It needs to be used regularly and exclusively for business use.
- It mustn’t be a gift deed.
- It should be owned by the Physician or his/her spouse.
Let’s just say you have an area that meets all the IRS rules for Physician tax write-offs, and it’s 300 ft², and your total home size is 3,000 ft². You can get to write off 10% of a lot of things. You have many things coming into that overall expense that can fall into tax deductions for Physicians.
Our accountants assess this to build a nice spreadsheet to track everything for your knowledge and tax filing. So, the home office is a wonderful deduction to take advantage of.
2. Internet and Phone Deductions
The internet and phone are separate from the home office even though they seem to be included in the home. Technically, you can have these expenses without having the entire home office deduction. That’s why SG INC CPA will separate these two. However, in this example, Form 1099 will work to settle expenses, such as physician tax deductions.
You’re probably working on a computer; that computer needs internet. You want to document everything for the IRS, so you must confirm everything with your accountant. However, the same would hold for your phone as well. You can add the following phone and Internet subscriptions as Tax Deductions for Physicians.
- Landline Phone Connection
- Mobile Device Internet (4G or 5G)
- Satellite Internet (Starlink)
Our tax consultancy team here will help you with all this. We create the case that the internet and phone are two other easy deductions when you have self-employment income.
3. Travel Expenses Deduction
Another physician tax deduction is the travel expense. So, if you are a 1099 Physician and you are traveling for work through flying to a conference, you shouldn’t forget to track your:
- Airfare
- Your Hotel or Accommodation Bills
- Meals
- Online or Traditional Cab
- Anything that you’re utilizing for that business trip.
Now, the key is that it needs to be a real business trip. We advise physicians to be sure that they document everything to provide to their accountants at the end of the year.
4. Vehicle Tax Deduction
Next for the physician tax deductions is a vehicle tax deduction. We think this one’s a little bit harder for Physicians, especially if it’s a side gig. It must probably be utilized in more than 100% of the business. And that’s the key here. So, two things you want to keep in mind here are:
- You can do it on a percentage basis.
- You can do it on a mileage basis.
Example for Percentage Case: If you use this car for 10% of your work for your side gig.” Use that example. Or you can take the mileage deduction. It will change every year. Currently, it’s at 65 cents in change. So, you can either use it per mile or the actual expenses. However, it breaks it down by a percentage of what was used for your 1099 income.
So, if your W2 role is 90% of the use, it might be your side gig. Physicians have to drive to a further hospital. It could be an example of where they could take advantage of that vehicle deduction. But again, SG INC CPA advises you to track and document everything so you can provide it to your CPA.
5. Membership Dues Deduction
Proceeding to the next Tax Deductions for Physicians, we combine a few of the deductions for that 1099 physician income.
We are looking at the following:
- Membership Dues
- Education
- Training
- You’re paying anything to keep a membership per se for this side gig or your entire gig.
You must keep a good history and prove it before the IRS with the help of your accountant or CPA. It may add a note about what this membership was for, and what this due was for. So, tally this to your accountant to let them fine-tune everything.
6. Business Insurance Deduction
Business Insurance is another viable Tax deduction for Physicians. Physicians can get auto insurance deducted for business vehicles as a portion of personal vehicle expenses used for business.
They can also consider separate insurance policies like medical malpractice for side gigs. However, they must meet all insurance premium standards to be eligible for physician tax deductions. Again, SG INC CPA sends you an alert to track all the documents for the deduction.
Two common example of Tax Deductions for Physicians are auto insurance. First, if you have a business vehicle that’s exclusively for business, and second, if it’s a percentage of a vehicle.
7. Healthcare Insurance Deduction
In the end, the 7th Tax Deductions for Physicians for self-employed physicians who pay for their health insurance. The premiums may be eligible to deduct Healthcare Tax Credit from their taxable income. Health insurance premiums are typically an above-the-line physician tax deduction. This implies that they can get the Healthcare insurance charges deducted from the taxable liabilities as the licensed medical practitioner.
SG INC CPA will help you with the following aspects to prove your Healthcare Tax Credit.
- Types of Health Insurance Plans
- Premium Costs
- Tax Deductibility
- Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs)
- Formalities for Self-Employed Physicians.
Final Words
We have provided you with an overall insight into 1099 income physicians’ Tax Deductions. You can use these write-offs with coverage options and tax implications of health insurance for your tax write-offs. SG INC CPA has a full-time and full-fledged team of experts to assess your case while managing expenses. You can consult with our financial advisor and tax professional to get guidance for circumstances and goals.