Physician Finance

Tax planning for geriatricians: optimization on a primary-care-adjacent income

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Tax planning for geriatric financial management with charts and cryptocurrency icons.

Geriatrics has the worst supply/demand mismatch in adult medicine. The tax planning matters more, not less.

Our field is one of the most intellectually and emotionally rewarding in medicine. It’s also one where compensation has lagged significantly behind procedural specialties, despite the crushing demand for our expertise. When your income is closer to primary care than to interventional cardiology, every percentage point of tax savings isn’t just a rounding error—it’s a meaningful addition to your retirement, your kids’ college fund, or your ability to cut back on call. Most generic physician finance advice assumes a sky-high income that automatically disqualifies you from key deductions. For many geriatricians, that’s not the case. Our income level, often from W-2 employment, opens up a unique set of powerful, and often overlooked, tax optimization strategies. This isn’t about finding loopholes; it’s about systematically using the tax code as it was written for professionals and small business owners. For more background, the geriatrics free tools and resources hub provides a good starting point for practice-level data.

The 199A QBI Deduction: A Geriatrician’s Secret Weapon

Most high-income specialists hear “199A” and immediately tune out. The Qualified Business Income (QBI) deduction, a 20% tax break on pass-through business income created by the 2017 tax reform, is notorious for phasing out for “Specified Service Trades or Businesses” (SSTBs)—which includes the practice of medicine. But here’s the critical detail: the phase-out doesn’t even begin until a taxable income of approximately $394,000 for single filers or $787,000 for those married filing jointly (projected for 2026).

Many geriatricians, especially those in academic or standard hospital-employed roles, fall comfortably below these thresholds. This means if you have any 1099 income—from a medical directorship, consulting, or even a small private practice—you are potentially eligible for the full 20% deduction on that income. A $50,000 medical directorship could yield a $10,000 deduction, saving you $3,000 to $4,000 in federal taxes.

The How-To Sequence:

  1. Identify Your QBI: Any income reported on a 1099-NEC or flowing from a partnership (K-1) or S-Corp (K-1) qualifies. This is your “Qualified Business Income.”
  2. Manage Your AGI: The key is to keep your taxable income below the phase-out threshold. If you’re approaching the limit, you can strategically lower your income with pre-tax contributions. This includes maxing out your 401(k) or 403(b), contributing to a 457(b) if available, and maximizing Health Savings Account (HSA) contributions.
  3. Calculate the Deduction: The deduction is the lesser of 20% of your QBI or 20% of your taxable income. For most, it will be 20% of the QBI.

The Planning Trap: The most common mistake is passive acceptance. A year-end bonus or a spouse’s income bump can accidentally push you over the income cliff, vaporizing the deduction. You have to model this out mid-year. This is precisely the kind of scenario the physician finance hub is designed to flag, allowing you to see how different contribution strategies impact your eligibility for credits and deductions like 199A.

Rescuing Lost Deductions with a 1099 Side Hustle

Remember when you could deduct your CME costs, medical license fees, DEA registration, journal subscriptions, and board exam fees? The Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the miscellaneous itemized deduction for unreimbursed employee expenses. For W-2 physicians, this was a direct financial hit, forcing us to pay for essential professional costs with post-tax dollars.

The solution is surprisingly simple: generate even a small amount of 1099 income. The moment you have self-employment income, you can file a Schedule C, “Profit or Loss from Business.” On this form, all “ordinary and necessary” business expenses are fully deductible against that business income. Your professional expenses—CME, licenses, DEA, home office, cell phone, laptop—are unequivocally ordinary and necessary for the business of being a physician.

Concrete Example: Let’s say you do a few telemedicine shifts on the weekend, earning $8,000 in 1099 income. During that same year, you spend:

  • $2,500 on a specialty conference (CME)
  • $800 on state medical license and DEA renewals
  • $500 on journal subscriptions
  • $1,200 for a new laptop used for your telemedicine work

That’s $5,000 in professional expenses. As a pure W-2 employee, you could deduct $0 of it. With the Schedule C from your side hustle, you can deduct the full $5,000 against your $8,000 of 1099 income. Your taxable side income drops from $8,000 to $3,000. You’ve effectively “rescued” $5,000 in deductions that were otherwise lost forever.

The Planning Trap: Meticulous record-keeping is non-negotiable. You must be able to prove these expenses were for your business. Use a separate credit card for all professional expenses and keep digital copies of every receipt. The IRS is strict about commingling personal and business funds. Don’t pay for your family’s vacation flights and your CME conference on the same transaction.

The Solo 401(k): Supercharging Your Retirement Savings

Once you have that Schedule C from your 1099 side income, you unlock the single most powerful retirement savings tool available to physicians: the Solo 401(k). It allows you to contribute far more than a SEP IRA on the same amount of income, and it avoids the pro-rata rule that complicates Backdoor Roth IRA contributions.

A Solo 401(k) has two contribution components:

  1. The “Employee” Contribution: You, as the “employee” of your own business, can contribute up to 100% of your self-employment compensation, capped at the annual employee limit ($23,000 in 2024, likely higher by 2026).
  2. The “Employer” Contribution: Your business, as the “employer,” can contribute up to 20% of your net adjusted self-employment income.

The total combined contributions are capped at $69,000 for 2024 (indexed to inflation). This is in addition to your W-2 401(k)/403(b) at your primary job. For a geriatrician with a $50,000 medical directorship, you could potentially shelter over $30,000 of that income in a pre-tax retirement account, dramatically reducing your current tax bill.

The How-To Sequence:

  1. Get an EIN: Obtain an Employer Identification Number from the IRS for your sole proprietorship. It’s free and takes minutes online.
  2. Open the Account: Open a Solo 401(k) account at a major brokerage (e.g., Fidelity, Schwab, E*TRADE). You must open the plan document before December 31st of the tax year, though you can fund it up until the tax filing deadline.
  3. Make Contributions: Calculate your maximum contribution and transfer the funds. Many brokerages provide calculators to help with this.

The Planning Trap: Missing the December 31st deadline to establish the plan. You can’t create a plan in March for the prior tax year. Another common trap is having pre-existing traditional IRA assets, which can complicate Backdoor Roth IRA contributions due to the pro-rata rule. A Solo 401(k) is the perfect place to roll those old IRA assets into, “clearing” your path for clean Roth conversions.

The HSA Triple-Stack: Your Ultimate Tax Shelter

The Health Savings Account (HSA) is the most tax-advantaged account in the entire US tax code, yet many physicians treat it like a simple checking account for medical bills. This is a massive missed opportunity. The true power of the HSA lies in its triple tax advantage when used as a long-term investment vehicle.

  1. Tax-Deductible Contributions: The money you put in is pre-tax, lowering your AGI. For 2026, the family contribution limit is projected to be around $8,750.
  2. Tax-Free Growth: Unlike a 401(k) or IRA, the investments inside your HSA grow completely tax-free. No capital gains, no dividend taxes.
  3. Tax-Free Withdrawals: You can withdraw funds tax-free at any time for qualified medical expenses.

The “Stacking” Strategy:

  1. Max It Out: Contribute the maximum family amount every single year you are eligible.
  2. Invest It Aggressively: As soon as the funds hit the account, invest them in low-cost, broad-market index funds. Do not let the cash sit there.
  3. Pay Out-of-Pocket: Pay for all current medical expenses with a credit card or post-tax cash. Do not touch the HSA.
  4. Save Every Receipt: Create a digital folder (e.g., in Google Drive, Dropbox) and scan every single medical, dental, and vision receipt for you and your family. This includes co-pays, prescriptions, orthodontics, everything.

Decades from now, in retirement, you will have a massive, tax-free investment account. You will also have an accumulated pile of receipts totaling tens or even hundreds of thousands of dollars. You can then reimburse yourself from the HSA, tax-free, for all those expenses you paid out-of-pocket over the years. It effectively becomes a tax-free emergency fund or a source of tax-free retirement income. After age 65, it can also be used for non-medical expenses, where it’s treated like a traditional IRA (taxed as ordinary income), but it retains its tax-free status for medical costs forever.

Cost Segregation Studies for Real Estate Investors

For geriatricians who own investment real estate, a cost segregation study is one of the most potent but least understood tax strategies. When you buy a rental property, the IRS typically requires you to depreciate the building’s value over 27.5 years. This provides a small, steady paper loss each year to offset rental income.

A cost segregation study is an engineering-based analysis that breaks the property down into its components. It identifies assets that can be depreciated on a much faster schedule—5, 7, or 15 years instead of 27.5. These components include things like carpeting, cabinetry, specialty lighting, landscaping, and fixtures.

The result is a massive acceleration of depreciation deductions into the early years of ownership. It’s not uncommon for a study to reclassify 20-30% of a property’s purchase price into these shorter-lived categories. This front-loads your tax savings, creating large paper losses that can offset your rental income and, in some cases, even your active W-2 income (if you or your spouse qualifies for Real Estate Professional Status, or REPS).

The How-To Sequence:

  1. Engage a Firm: Hire a reputable engineering firm that specializes in cost segregation studies. This is not a DIY project.
  2. Provide Documents: You’ll provide the purchase agreement, appraisal, and any renovation records.
  3. Receive the Report: The firm delivers a detailed report breaking down the asset values and their new depreciation schedules.
  4. File Form 3115: Your accountant will file Form 3115, “Application for Change in Accounting Method,” to implement the study’s findings. This can often be done retroactively for properties purchased in prior years.

The Planning Trap: Thinking it’s only for large commercial properties. A cost segregation study can be highly effective even for a single-family rental or a small multi-family building, especially if the purchase price is over $500,000. The key is ensuring the tax savings will outweigh the cost of the study (typically a few thousand dollars). If you’re serious about real estate, finding a physician-focused CPA who understands this strategy, along with REPS, is absolutely essential.

The through-line here is proactivity. Our income structure as geriatricians requires a more deliberate and sophisticated approach to tax planning than simply taking the standard deduction. By layering these strategies—managing AGI to secure deductions like 199A, using a side hustle to unlock business expenses and a Solo 401(k), maximizing your HSA as an investment vehicle, and accelerating depreciation on real estate—you can fundamentally change your financial trajectory. Each strategy builds on the last, creating a powerful engine for wealth creation that lets you keep more of what you earn.

Reviewed by Pouyan Golshani, MD, Interventional Radiologist — May 21, 2026