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The Tax Person Cometh…


As we settle in for the winter months, the holiday season gives way to a much less welcome time of year. Here are a few things young physicians should keep in mind as Tax Day approaches. By Christopher Malgieri, MD

Tax season used to be a much simpler time for all of us.  One of the painfully few benefits of having a modest income was a simple tax return and oftentimes a refund from the IRS that dwarfed anything Santa left under the tree.  As we transition to life after residency, finances become more complicated.

The most profound change to an attending’s tax bill is the size of it.  With the average salary hovering around $400,000, young anesthesiologists suddenly find themselves in an unfamiliar tax bracket.  Federal deductions alone will cause the disappearance of at least 35% of income above this level.  After deductions for Medicare (1.4%), social security (6.2% of first $147,000 earned), and state income tax (5% in Massachusetts, for example); a physician can be left with little more than half of pre-tax earnings. 

To be clear, taxes are important.  Paying them is the ethical and lawful thing to do.  However, it behooves a young physician to understand the basics of taxes to lower their taxable income.  There are a handful of strategies that all newly minted anesthesiologists should employ to make sure they can shelter their income from more tax than is necessary. (Disclaimer:  Please discuss all financial decisions with your tax professional or CPA!  I’m an anesthesiologist, not a tax attorney!)

    • First and foremost; put away money for retirement.  If your finances allow, maximize your tax-deferred savings in an employer (or self-employed) sponsored retirement account.  Some employers offer the opportunity to put additional funds into a separate tax-deferred 457 account.  These are like a 401k, but come with a few additional risks that can be explained here.

    • Buy a home and with a traditional mortgage.  The interest on the first $750,000 of your loan is tax deductible, along with your property taxes*, state and local income taxes.   This is yet another reason why owning a home helps build wealth when compared to rent.  Rent is almost always paid completely with post-tax dollars.  For those young physicians who are self-employed (or who have a spouse that operates a business out of the home), there are more housing expenses that might be tax deductible.

    • Take advantage of healthcare FSA funds, or if you have a qualified high-deductible health plan, a health savings account.  Both funds make it possible to use pre-tax dollars for healthcare expenses, many of which you have always paid in the past using post-tax dollars.  Co-pays, glasses, prescriptions, over the counter medications, sunscreen and hospital bills are a small list of examples.  There is a big difference in a $500 dollar invoice that is paid from income that has already been taxed.

    • Until recently, all state and local property taxes (SALT) were tax deductible for payers that itemize deductions.  In 2017 the standard deduction was increased significantly, and the eligible SALT deductions were capped at ten thousand dollars.  There is the potential for this cap to increase in 2022, which would likely make it advantageous for many more young physicians to itemize their deductions to shelter more of their income from taxes.  Itemized deductions can include a tremendous amount of everyday purchases that can be found on the IRS website (  After you read this, you will start to realize why so many donations are made on New Year’s Eve!

In summary, you should start to appreciate the household savings inherent to purchases with pretax dollars.  Have a discussion with a CPA about which strategies you can use to lower your tax burden, especially at a time when your income is taxed so heavily.  Paying taxes is your civic duty, but avoid overpaying when possible.  Save your generosity for your favorite charitable organization (and then deduct it from your taxable income!).

Christopher J. Malgieri, MD, is an anesthesiologist with Lifespan Physician Group in Providence, RI, specializing in pediatric anesthesiology. Dr. Malgieri completed his medical residency as chief resident at Emory University in Atlanta. He is a member of the Society of Pediatric Anesthesiologists, the American Society of Anesthesiologists, and is Vice President of the Rhode Island Society of Anesthesiologists.

The ASA Committee on Young Physicians is pleased to present this monthly article series on personal finance. These articles are not written by hedge fund managers or real estate tycoons but by practicing physicians. Some have business degrees and some do not – but every contributor is an anesthesiologist who has some guidance to offer the rising generation of attending physicians. It is not the intention of the committee to offer definitive financial advice, but rather some pearls of wisdom to consider while developing a personal fiscal plan.


ASA Community Blog is published as a benefit for ASA members. The views expressed on this blog are those of the individual contributing writers only and do not necessarily represent the opinions of ASA.