KEEP MORE OF WHAT YOU EARN

This doximity article is all about how physicians can make the tax laws work for them and what the underlying strategy is regarding proactive tax work.

Dr. Kaufman is available for Keynote speaking engagements about taxes and finances for physicians. Please email contact him at: noah@physiciantaxsolutions.com for more information.

STOP BEING AFRAID OF AN IRS AUDIT

This article appeared on KevinMD.com and is a good close look at the IRS audit process and why it pays to document, have a strong team in your corner, and get proactive tax help over doing the default with your typical tax-preparer.

Dr. Kaufman is available for Keynote speaking engagements about taxes and finances for physicians. Please email contact him at: noah@physiciantaxsolutions.com for more information.

TAX TIPS FOR PHYSICIANS

Dr. Kaufman has joined forces with doximity.com to bring value to physicians through ongoing financial education. Have questions about your taxes or ready to save more on your largest yearly expense? Contact our founder today at noah@physiciantaxsolutions.com for a free consultation.

THE MOST TAX EXPENSIVE MISTAKES THAT PHYSICIANS MAKE

This article appeared on doximity.com and is about the biggest mistakes that physicians & entrepreneurs make on taxes is failing to plan and failing to have a professional team to work with to save dramatically on taxes.

Dr. Kaufman is available for Keynote speaking engagements about taxes and finances for physicians. Please email contact him at: noah@physiciantaxsolutions.com for more information.

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[Sticky] W2 vs. 1099 questions  

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Noah T. Kaufman, MD
(@tax-solver)
Co-Founder Admin
Joined: 7 months ago
Posts: 3
03/02/2019 3:33 pm  

Some people ask why 1099 is better for taxpayers then W-2 given all the benefits and the fact that your employer pays half of Medicare. That’s a great question! Here is the answer:

If you receive the same economic benefit being an employee versus an independent contractor, and if you operate as an independent contractor through an S corporation and pay yourself a reasonable salary from the S corporation, use a C corporation to provide consulting/management services, you should come out far ahead as an independent contractor.  Let’s look at a couple of examples: 

Example 1:  Assume you are paid a W-2 of $500,000 from your current employer with pre-tax benefits worth $40,000, you have $20,000 of personal unreimbursed business expenses, your filing status is married filing jointly, and you claim the standard deduction.  In this example, using 2019 tax rates, your share of FICA and Medicare Taxes is $15,490, your Federal and State income taxes are $140,787,  and you are subject to a $2,250 Medicare surtax (.09% of your excess W-2 over $250,000), resulting in a grand total of $158,527 in taxes.

Example 2:  Same as example 1, except your employer pays your S corporation as an independent contractor the sum of the $500,000 and pre-tax equivalent $40,000 benefits for professional services.  If you determined that a reasonable salary from your S corporation was $200,000, you claimed nothing more than the $20,000 business deductions, and you set up a C corporation to provide consulting and/or management services which reimburses you for the $40,000 pre-tax benefits.  In this example, your total FICA and Medicare Taxes are $22,280, your Federal and State income taxes are $108,310, resulting in a grand total of $130,589 (While it is true you had to pay more in FICA and Medicare Taxes, your overall tax liability was reduced by $27,871).

Example 3:  Same as example 2, except your S corporation funds a retirement plan for $75,000 and comes up with $25,000 of additional deductions (i.e., vehicle, home office, etc. – there are many others!), pays you a reasonable salary of $125,000.  Since you now qualify for a Section 199A deduction of $39,175, your total FICA and Medicare taxes are $19,125, and your Federal and State income taxes are $63,082, which equals a grand total of $82,207 (resulting in $76,253 less taxes paid than in Example 1)

Do you have other questions related to W2 verse 1099? Ask away! Our tax experts are standing by ready to help.

Noah T. Kaufman, MD | Physician Tax Solutions | President & Co-founder
noah@physiciantaxsolutions.com | (970) 515-7905 | Keep More of What You Earn


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