As a doctor, you can be proud that you take on one of the most demanding, challenging and rewarding roles that we have in modern society. Sadly, saving lives does not exempt you from taxation and, for that reason, knowing what – and when – to file your taxes can make life a bit simpler. You don’t have time to sit down and go through every last letter on taxation where you live, though, so this simple guide should hopefully help you feel a little bit easier about some of your tax filing responsibilities.
It depends on how you are employed, to begin. A doctor is at the stage whereby they can be an employee or a contractor. How you are employed changes your taxation demands entirely. Independent contractors do an end-of-year Form 1099, while an employee would manage with a Form W-2. While an employee would have their earnings withheld to manage their taxation via 2-4, an independent contractor would not.
Therefore, an independent contractor must also file a Schedule C alongside their Form 1040 at the end of the year. Since you are self-employed, this is a must.
Really, a contractor should be looking to make quarterly estimate to both the State and the Treasury. This makes it much easier for you to manage your finances and to keep the government off your back. Make sure that you sit down with any employer and make sure you are full aware of how the payment structure is going to work. If you don’t, it could cause you some major headaches when the time to pay your taxes arrives.
Your expenses can be quite tough to work out, too. license fees, travel costs, your dues, any kind of subscription and/or examination costs can all go down as a legitimate expense. This should be reported via a Form 2106 most of the time, if you are an employee. An independent contractor would need to put this in their deductions as part of a Schedule C.
Also, expenses on your Form 2106 might be made deductions instead, which can further alter the image of your taxes.
What you should look to do as a doctor is look to bring in a CPA locally. They can help you look at where you are as a professional, better understand what kind of filing you need, and help you put it all through without fear of mistake.