Some medical professionals such as hospitalists are considered self employed for tax purposes and receive a 1099 from the facility for whom they provide services. For these professionals tax treatment is much different than a W-2 employee. As with other self employed individuals it is necessary to report income and related expenses on Schedule C.
Here are some important topics to consider:
1) Be on the lookout for your 1099(s). Your reported income for Schedule C should include all income received and should match the total of the 1099s received. There may be timing issues so be sure to reconcile your records to report the correct amounts and prevent the possibility of receive an IRS underreporting notice.
2) SEP Plan: If you are self employed, you should consider investigating the tax benefits of a SEP plan. We can your review your situation, discuss tax benefits and how to implement, maximum contribution calculations, and any limitations. It’s important to consider using these tax rules to your benefit.
3) Record Keeping: This is an important topic. Be sure you understand IRS record keeping requirements and how to design a good bookeeping and records system. We can help you identify the areas of weakness to help protect yourself in case of an audit.
4) Depreciation: If you purchase any fixed assets be sure to understand how these items should be reported and possibly depreciated.
5) Self Employment Tax: You should understand what it is, how it’s calcuated and that it exists. Many new Schedule C owners forget about this tax and maybe surprised by when they prepare their taxes in the spring.
6) Estimated Taxes: As a self employed hospitalist or other medical professional you will be required to pay quarterly tax estimates. A CPA can assist you with budgeting for the year and help you keep up with tax estimates. The IRS and states can impose additional penalties for not paying quarterly estimated taxes throughout the tax year.
If you are a self employed hospitalist or other medical professional feel free to contact our firm to discuss your tax needs. We can help you with your tax filings, estimated taxes, and provide peace of mind. Contact Stephen Scott, CPA at firstname.lastname@example.org to schedule an appointment to discuss your tax and other financial needs.