Tax Efficiencies



Business Expenses


Taxable Income - net capital gain


Retirement Contribution


Standard Deduction


Health Insurance


50% of ss & Medicare Tax


Health Saving Account


Taxable Income


QBI Deducation


Net Taxable Income


How Independent Contractor Physicians can potentially save an additional 20% through a Qualified Business Income Deduction

Being an independent contractor physician (ICP) can be GREAT because as a business owner, it allows multiple ways to lower your taxable income via deductions. For example: 50% of social security & Medicare tax, health insurance premiums, purchasing a car, home office expenses (including cellphones and computers), and most importantly, retirement contributions ($57k/year in 2020, $63.5k/year if 50+). More if you add your spouse as an employee or participate in a defined benefit plan). With the sweeping tax reform of 2018, ICPs can potentially save an additional 20% via the Qualified Business Income (QBI) deduction.

Case Study: Emergency Medicine Physician

In order for most personal services professionals to utilize the QBI, a married couple has to keep their taxable income under $326.6k (phased out from $326.6k-$426.6k). The rule states that the deduction is equal to or lesser of 20% of the taxpayer’s QBI or 20% of the taxpayer’s net capital gain. By utilizing the QBI, this ICP saved about $10.6k (assuming a 25% effective tax rate).

<< Back to Independent Contractor Physicians

This example is from 2020 and is a hypothetical and intended for illustrative purposes only. Neither Generational Financial Partners, NYLIFE Securities LLC and its affiliates, nor its representatives, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.