The Prognosis Is In: You're Paying Too Much in Taxes
- Doc Wealth
- 4 days ago
- 3 min read
Most 1099 physicians are overpaying thousands in taxes each year — often close to 50% of their income in high-tax states. This article breaks down why (complex tax codes, self-employment taxes, missed entity elections, and underused deductions) and how to fix it through strategic planning — from S-Corps to defined benefit plans to real estate investments. Learn why most accountants fall short and how Doc Wealth’s proactive, hands-on, comprehensive approach helps doctors save tens of thousands off their tax bill while also guiding them on long-term wealth preservation.
The tax code isn't exactly light bedtime reading
It's roughly 6,871 pages of financial fine print that would make even the most determined resident fall asleep faster than a midnight admission. While you were busy learning to save lives, Congress was busy creating a labyrinth that can confuse even the brightest doctors.
Here's the re likely in the 37% federal bracket. And if you live in California or New York, your combined tax rate can approach 50% of every dollar you earn. In fact, 33% of our clients are in CA, NY, or NJ, where these high state taxes take effect. Add in quarterly estimated payments that hit like clockwork—and often harder than expected—and you’ve got a financial headache no attending ever warned you about.
The Financial Vital Signs Nobody Checks
Let's run through the numbers— because unlike the lab results you see daily, these won't auto-populate in your EMR:
State tax cap: The cap on the ability to deduct state and local taxes adds insult to injury, particularly if you live in a high-tax state such as CA or NY.
Medicare surtaxes: Cross $200K and add 0.9%; tack on investment income, and another 3.8% joins in.
Self-employment hit: 1099 physicians pay both sides of payroll taxes—15.3% before federal or state even begin.
You wouldn’t perform surgery without imaging, so why navigate a tax structure without a specialist?
Why Your Regular Accountant Isn't Enough
Your tax situation as a 1099 physician isn't remotely comparable to W-2 employees or even other small business owners. You've got financial complexity they'll never see:
Multiple 1099s from different facilities or contracts
Self-employment tax on your entire income
Quarterly estimated tax payments with penalties if you guess wrong
Multi-state tax obligations if you're working in multiple states
Retirement account options designed for self-employed professionals (SEP IRA, Solo 401(k))
A general accountant treats all high earners the same. A 1099-focused physician tax professional understands that a locum hospitalist has different needs than an independent anesthesiologist.
Many 1099 physicians can contribute $70,000+ annually to retirement accounts through the right structure. How many actually do it? That's wealth-building disguised as paperwork.
The Doc Wealth Prescription: Proactive, Not Reactive
At Doc Wealth, we specialize in independent physicians like locum tenens, practice owners, and contractors, where the tax code hits hardest. Here’s how our approach is different:
Year-Round Planning: No April panic. We monitor income and deductions throughout the year.
Entity Structure: S-Corp, LLC, or PLLC? We ensure the structure fits your income level and goals.
QBI Strategy: Split income smartly and leverage the 20% QBI deduction for maximum savings.
Advanced Deduction Mapping: We identify overlooked write-offs for travel, CME, and home office use.
Retirement: Solo 401(k), defined benefit plans, and backdoor Roths built into your tax plan.
Take Dr. Jennings, a hospitalist earning $572K as a 1099. Under her prior accountant, she paid over $165K in combined taxes each year. After partnering with Doc Wealth, we reduced her tax bill by $127,000, all IRS-compliant.
525K
Income
195K
Previous Taxes
127K
Reduction
Just like you wouldn't send a patient with a complex cardiac issue to a general practitioner, you shouldn't trust your six-figure 1099 tax bill to someone who does taxes for everyone.
Over 650 physicians have already made the switch to specialist-level financial care. The best time to fix your tax strategy was five years ago. The second-best time is right now.
Disclaimer:
This material is intended for educational and informational purposes only and does not constitute tax, legal, accounting, or financial advice. The content is general in nature and may not apply to your specific circumstances. Tax laws and financial regulations are subject to change and interpretation, and the application of these laws can vary based on individual situations. Before making any decisions, you should consult with a qualified tax advisor, legal counsel, or financial professional.