Side-Income Package for Employed Physicians
Bookkeeping and tax for doctors with income outside their main job, such as locums, expert witness work, or medical directorships. Your side income is tracked, your quarterly estimates are calculated, and your return is prepared by enrolled agents.
What This Is
This package is for physicians who draw a W-2 salary from a hospital, health system, or group and also earn money on their own. That might be locums shifts, expert witness reviews, a medical directorship, consulting, speaking, or chart review work paid on a 1099. We keep the books for that side income, calculate your quarterly estimated payments, and prepare your tax return so the numbers fit together.
Marc Eastin, our Chief Information Officer, is a practicing neurosurgeon who also runs a business. He knows what it is like to have a paycheck with taxes already withheld sitting next to income that has nothing withheld at all. The package was built around what that situation actually requires. The tax work itself is handled by enrolled agents, who are federally licensed to represent taxpayers before the IRS.
What We Handle
What We Handle
We set up and maintain books for your side income in QuickBooks Online, with deposits and expenses categorized and reconciled. We calculate quarterly estimates for federal and state taxes. At year end we prepare your personal return, any business return if you have an entity, and nonresident state returns for locums work done in other states. If the IRS or a state sends a notice, an enrolled agent responds for you.
Who It Fits
Who It Fits
Employed physicians whose side work has grown past the point where a shoebox of 1099s works. That includes attendings picking up locums weekends, specialists doing medicolegal reviews, and physicians holding a paid directorship at a surgery center or nursing facility. If the side work starts to look like a practice of its own, we can help you plan that next step as well.
Why It Matters
Your employer withholds tax on your salary based on your salary alone. Nobody withholds anything on 1099 income. At physician income levels, side earnings are usually taxed at your top bracket, and self-employment tax may apply on top of that. Without estimated payments, a good year of side work turns into a large bill in April along with underpayment penalties for the quarters you missed.
The details are where money is lost. Many physicians assume they owe the full self-employment tax on their side income when their salary has already passed the Social Security wage base, which means only the Medicare portion applies. Others form an S corporation because a colleague did, without checking whether the savings cover the added payroll and filing costs. Others simply never track the expenses that belong to their side work.
Penalties and Surprises
Penalties and Surprises
The IRS expects tax to be paid as income is earned. Higher earners generally need to pay in 110% of the prior year’s tax or close to the current year’s actual tax to avoid penalties. Guessing at these numbers, or paying nothing until the return is filed, adds cost that is entirely avoidable with a little planning each quarter.
Deductions and Structure
Deductions and Structure
Expenses tied to your side work can reduce the tax on it. That can include extra state licenses, unreimbursed travel for locums assignments, malpractice coverage for the side work, and a home office used for expert witness reviews. Whether an entity makes sense depends on your salary, your side income, and your state, and the answer is often different from what you hear in the physician lounge.
What Changes
You know what to set aside each quarter and when to pay it. Your side income has its own clean set of books, so you can see what the work actually nets after taxes and expenses. That makes it easier to decide whether another locums block or a second directorship is worth your time.
Tax season becomes a short exchange instead of a weekend of sorting through statements. Your side income records are already reconciled when the return is prepared, and the same team that kept your books files the return. You are not explaining your situation to someone new every spring.
Predictable Payments
Predictable Payments
Estimates are based on what you have actually earned so far, not a rough guess made in January. If your side income jumps mid-year, we adjust the next payment. If your hospital withholding can be increased instead, we can show you how to cover the gap that way. Either way, there is no large surprise waiting at filing time.
Room to Plan
Room to Plan
Side income opens options a W-2 alone does not. A solo 401(k) tied to your side work can accept employer contributions separate from your hospital plan, even though your employee deferral limit is shared between the two. We look at these choices each year with your full picture in view, so you keep more of what you earn outside your main job.
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