PART 1: How Year-End Tax Planning Works for Physicians in 2025

November 20, 2025

Are You Ready for 2026?
This 10-part series walks physicians through the most important year-end tax strategies before the 2026 tax changes hit.
Short, clear, and practical — each guide breaks down the real moves doctors can take now to reduce taxes, protect income, and get ahead of rising brackets.
If you want a simple roadmap for 2025 year-end planning, this is where to start.

You can feel it when Q4 hits.
Your schedule shifts.
Your income jumps around.
Deadlines start to stack up.
And suddenly you’re asking the same question every physician asks this time of year:

“Am I actually on track with my taxes… or am I about to get hit with a bill I didn’t see coming?”

You’re not alone.
This happens to almost every doctor — W-2, 1099, or both.

So let’s slow things down.
Let’s walk through how year-end tax planning actually works for physicians.
And let’s make it simple, clear, and stress-free.

Your Income Type Tells the Whole Story

You already know your income is different from most professions.
But here’s the part that matters:

Your tax moves depend entirely on how you earn.

Once you understand that, everything else snaps into place.

So let’s break it into three groups.

1. W-2 Physicians

If you’re employed by a hospital or group, you get a W-2.
Your taxes are withheld.
Everything feels automatic — until you realize what you can’t deduct anymore.

No deduction for CME.
No deduction for hotel stays.
No write-off for licensing fees.
No write-off for medical journals.
No write-off for home office.
No mileage between hospitals.

And it’s frustrating, because you spend a lot out-of-pocket.

So your year-end plan is simple:

  • Fix your withholding

  • Fill every pre-tax bucket

  • Max your 401(k) or 403(b)

  • Use your HSA or FSA

  • Review your December bonus

If you live in a high-tax state, start here to save more:
high state income taxes for physicians.

You have fewer levers — but they still move big numbers when used correctly.

2. 1099 Physicians

This is where everything opens up.
You have more control.
More deductions.
More strategy.
And more ways to shrink your tax bill before December 31.

Your world includes:

  • CME

  • Travel

  • Licensing

  • Malpractice insurance

  • Scrubs

  • Equipment

  • Software

  • Section 179

  • Home office

  • Mileage

  • Telehealth costs

  • Business travel

  • Dues and subscriptions

Your challenge isn’t finding deductions.
Your challenge is capturing all the ones you already earned.

If you’re newer to self-employed income, start with this guide:
1099 contractor tax guide for physicians.

And remember — every dollar you miss now is a dollar you can’t deduct later.

3. Mixed-Income Physicians (W-2 + 1099)

This is the fastest-growing group.
Full-time W-2 job.
Plus telehealth.
Plus locums.
Plus consulting.
Plus non-clinical work.

And this combination can get messy fast.

You have to juggle:

  • Withholding

  • Estimated taxes

  • Dual retirement plans

  • 1099 deductions

  • Payroll decisions

  • Medicare surtaxes

  • State tax planning

  • Entity setup

But here’s the good news:
Mixed-income doctors have some of the biggest tax-saving opportunities of all.

If you’re building side income or exploring new paths, read this first:
how physicians increase non-clinical income.

This is where smart planning matters most — because you have multiple income streams colliding at once.

The Real Physician Tax Risks in Q4

Once you know your income type, the next step is knowing what can hurt you.
Here are the five areas that catch doctors off guard every year.

1. Underpayment Penalties

This hits physicians constantly.
Your income changes fast.
Your shifts change.
Your side work spikes.
Your withholding doesn’t adjust in real time.

And the IRS doesn’t care that you’re busy.

Use the safe harbor rule:

  • Pay 100% of last year’s tax

  • Or 110% if your AGI was high

  • Or 90% of this year’s liability

Fix this before December.
It’s one of the easiest problems to avoid — and one of the most expensive if you ignore it.

2. Missed Retirement Windows

Doctors routinely leave tens of thousands in deductions on the table.

W-2 physicians should review contribution limits now.
1099 physicians should review Solo 401(k) or SEP options now.
And mixed-income physicians must coordinate both plans to stay inside limits.

If you want a quick checklist, use this guide:
doctor tax-saving strategies.

Your retirement plan is the fastest way to reduce taxable income.

3. Wrong Entity Setup for 1099 Income

Your structure matters more than you think.

Schedule C works… until it doesn’t.
An S-corp works… but only with the right salary.
An LLC works… but only with clean reimbursements.

If you aren’t sure your structure is set up correctly, check this:
best tax structure for doctors.

A clean entity saves more than deductions ever will.

4. Missed Business Deductions

This one is simple.
You earn the deduction all year.
You lose it at year-end if you don’t record it.

If you had CME travel, check here:
business vacation deductions.

If you traveled between hospitals, record your miles.
If you worked from home, document your space.
If you bought equipment, keep the receipt.

You still have time to clean all of this up.

5. Not Harvesting Market Losses

If you have investments, you may have losses sitting unused.
You can use them to offset gains.
You can cut your tax bill.
And you can position yourself better for 2026.

Start with this guide:
market losses tax-saving opportunities.

It’s one of the simplest moves doctors forget.

Your Q4 Playbook for 2025

Here’s the short, simple checklist you can follow today:

  • Check your income

  • Fix underpayment issues

  • Max your retirement contributions

  • Open a Solo 401(k) if needed

  • Adjust your W-2 withholding

  • Review entity choices for 1099 income

  • Record every deductible expense

  • Track your miles

  • Harvest losses

  • Plan around 2026 rule changes

You’re not late.
But you’re right on the edge of the final window.

FAQ — Year-End Tax Planning for Physicians

1. Can I still reduce my 2025 taxable income?

Yes.
You still have meaningful moves before December 31.

2. What’s the fastest way for physicians to lower taxes now?

Max your retirement contributions.
Then fix any underpayment issues.

3. Do 1099 doctors really need an S-corp?

Not always.
But many do.
Income level and stability matter most.

4. What’s the biggest mistake doctors make in Q4?

Ignoring estimated taxes.
And missing easy deductions.

5. What’s the smart next step?

Map your income type.
Then follow the steps that match it.

Ready to talk strategy? Start here.

Visit contact physiciantaxsolutions.com to schedule a consultation and learn how we can help you take control of your tax strategy today.

This post serves solely for informational purposes and should not be construed as legal, business, or tax advice. Individuals should seek guidance from their attorney, business advisor, or tax advisor regarding the matters discussed herein. physiciantaxsolutions.com assumes no responsibility for actions taken based on the information provided in this post.

 

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