Whether you’re employed (W-2), an independent contractor (1099), or somewhere in between, knowing what you can write off (and how to track it) can save you thousands each year. By Joseph Klaus, MD
As a physician, you’ve worked hard to get where you are—so why give more of your earnings to taxes than you have to? This guide covers the most useful tax deductions and savings strategies for physicians—plus some tips on how to stay organized.
Business & Professional Expenses
If you’re a 1099 physician, locums provider, or own a side practice, a lot of your work-related expenses are tax-deductible.
•Medical Equipment & Supplies – Stethoscopes, gloves, scrubs, and anything else you need to do your job.
•Malpractice Insurance – Premiums are deductible if you’re paying for them yourself.
•Medical Board & Licensing Fees – If you’re shelling out cash to stay certified, you can write it off.
•Continuing Medical Education (CME) – Alas, the CME thorn in our side can save us money come tax day.
•Professional Memberships & Subscriptions – ASA, AMA, state medical associations, and medical journals.
•Legal & Accounting Fees – If you’re paying an accountant or lawyer for work-related advice, it counts.
Pro Tip: If you’re a W-2 physician, you can’t deduct most of these anymore (thanks to the 2017 tax law). But if your employer isn’t reimbursing you for CME, licensing, or board fees, it’s worth negotiating these into your contract.
Home Office Deduction
If you do telemedicine, run a side business, or just handle admin work from home, you may qualify for the home office deduction.
This lets you write off a percentage of:
•Rent or mortgage interest
•Utilities (electricity, internet, phone)
•Office furniture & supplies
How to qualify: Your home office has to be a dedicated workspace (so your couch doesn’t count). But if you have a desk in a separate area used exclusively for work, you’re good to go.
Vehicle and Travel Expenses
If you’re driving between hospitals, surgery centers, or locums gigs, you can deduct:
•Mileage – The IRS rate is $0.67 per mile for 2024.
•Gas, Maintenance, or Lease Payments – If your car is used for work-related driving.
•Flights, Hotels, and Meals – If you’re traveling for CME or locum tenens work.
How to stay organized: Use an app like Stride Tax or MileIQ to track mileage. It’s way easier than manually logging every drive.
Retirement Contributions (AKA Free Money in Tax Savings)
One of the best ways to lower your tax bill is to max out tax-deferred retirement accounts:
•401(k) or 403(b) Contributions – Pre-tax contributions lower your taxable income now while growing tax-free.
•Backdoor Roth IRA – A must for high earners who don’t qualify for direct Roth IRA contributions.
•Solo 401(k) or SEP IRA – If you have locums or other 1099 income, you can contribute even more.
•Defined Benefit Pension Plans – Best for high-income, self-employed physicians looking for huge tax-deferred savings.
Health-Related Deductions
•Health-related expenses — doctor visits, copays, prescriptions, and procedures can all be written off.
•Health Savings Account (HSA) – If you have a high-deductible health plan, HSA contributions are tax-deductible and grow tax-free.
•Flexible Spending Account (FSA) – Lets you pay for medical expenses with pre-tax dollars.
Real Estate and Passive Income Tax Benefits
If you own property, here are some major tax benefits:
•Mortgage Interest Deduction – If you own a home, mortgage interest is deductible.
•Rental Property Depreciation – Helps offset rental income.
•Short-Term Rental Tax Strategies – Renting out a property on Airbnb? Some expenses may be deductible.
Charitable Contributions
•Cash Donations – Can be deducted up to 60% of adjusted gross income (AGI).
•Medical Mission Trips – If you volunteer abroad, flights, lodging, and supply costs may be deductible.
Staying Organized: The Key to Actually Using These Deductions
All these tax deductions are great—but they only help if you track and save your expenses. Here’s how I do it:
1. Use a Business Credit Card or Separate Account
If you’re a 1099 physician or own a practice, using a separate credit card or checking account makes it easier to track work expenses.
2. Keep Those Receipts
I personally save receipts in the files app on my iPhone. Every time I pay for gas, a medical bill, or a business expense, I save the photo in a folder labeled with the year and type of expense.
Each doc gets a label with:
•The date
•A brief description
•The dollar amount
It takes an extra 30 seconds per expense (sigh), but since it’s on my phone, I can take care of it and move on with my day. It automatically syncs with my laptop as well, so when tax season comes, I just go through the files and add everything up.
Final Thoughts: Keep More of What You Earn
Physicians already deal with high taxes, but there’s no reason to pay more than necessary. With a little organization and planning, you can take advantage of every deduction available, reduce your tax burden, and keep more of your hard-earned money.
By knowing what you can deduct and using a simple system to track expenses, tax season becomes a whole lot easier—and you’ll feel confident knowing you’re keeping as much of your income as possible.
Questions or tips? Shoot me an email with your favorite tax-saving strategy or let me know if there’s something I missed!
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.
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