If you receive income reported on Form 1099 instead of a W 2, the IRS considers you self employed. Your earnings must be reported on Schedule C and your net earnings are calculated on Schedule SE. According to the Self Employed Individuals Tax Center, you must file a tax return if your net earnings from self employment are 400 dollars or more for the year.
For independent cardiologists, this includes payments for professional services, consulting work, call coverage, and any income where taxes are not withheld by an employer. Even if you work at a single hospital, you are treated as a business for tax purposes.
Self employment tax covers Social Security and Medicare contributions. The calculation follows the method in the Schedule SE Instructions.
Revenue: $520 000
Expenses: $120 000
Net profit: $400 000
Net earnings = $400,000 times 0.9235 = $369,400
Self employment tax = $369,400 times 0.153 = $56,502
Employer equivalent portion you may deduct on Form 1040 = $28,251
This deduction lowers your taxable income but does not change the amount of self employment tax you owe.
The IRS allows deductions for expenses that are ordinary and necessary for your business. Publication 334 outlines these rules for small businesses.
Common deductible expenses for independent physicians include
The IRS expects receipts and contemporary records that show how each expense relates to your medical practice.
Yes. Self employed individuals may deduct the cost of health insurance premiums for themselves and their families if they are not eligible for employer sponsored coverage.
Source: IRS guidance on the Self Employed Health Insurance Deduction.
This deduction appears on Form 1040 and reduces adjusted gross income.
Independent physicians may use the retirement plans described in IRS guidance for self employed individuals.
Allows employee deferrals and employer contributions.
See:: One Participant 401 k Plans, IRS.
Allows contributions of up to 25 percent of net earnings from self employment.
See:: SEP Plans, IRS.
Both plans reduce taxable income and support long term retirement savings.
High earning physicians sometimes elect S corporation treatment to reduce self employment tax. Under IRS rules, an S corporation must pay reasonable compensation through payroll and treat the remainder as distribution.
See: IRS S Corporation guidance.
This decision should be evaluated based on net income, consistency of revenue, and the ability to follow payroll and recordkeeping requirements.
Because no employer withholds taxes from 1099 income, you must make quarterly estimated tax payments using Form 1040 ES. Publication 334 outlines the IRS expectations for small business recordkeeping.
Maintain clear records of
Accurate records help protect deductions and support your Schedule C and Schedule SE reporting.
Taxes for independent physicians can feel complex, especially when you want to ensure your deductions, retirement contributions, and entity decisions follow current IRS rules. When you want clear guidance and confidence in your filing, meeting with a specialist is the most effective option.
Schedule a consultation with Accolade Accounting to review your 1099 income, confirm your deductions, and strengthen your 2025 tax strategy using current IRS guidance.
When it comes to reliable accounting services in Atlanta, GA, look no further than Accolade Accounting. With a highly experienced accountant team, we have assisted numerous businesses in developing and implementing effective accounting systems. If you need expert guidance, don’t hesitate to contact our certified public accountants, call 470-646-2663
