Pro Tax Planning Tips For Physicians

You meant to be an S-Corp, but Form 2553 went in late or never got filed. The IRS built a fix for exactly this. Rev. Proc. 2013-30 lets physicians get a late election treated as if it had been filed on time, no formal ruling required, if you act inside the three-years and 75-days window. Here's when an election counts as late, how to qualify, what reasonable cause means, and how to file.

Your S-Corp election trims federal self-employment tax, but part of that savings can disappear on your state return. California, New York, and New Jersey each tax S-Corps in ways with no federal equivalent. Here's what the election actually costs physicians in each state, from California's 1.5% franchise tax to New York City's 8.85% GCT, and how it should change your decision before you file.

Of all the numbers on a physician's S-Corp return, the reasonable salary is the one the IRS reads first. Set it too low and the distributions that were supposed to skip self-employment tax can be reclassified as wages, with penalties on top.

Most physician groups land in partnership taxation by default, not by design. The two structures treat the same income very differently, and the difference compounds year after year. See which one fits your group before the choice gets locked in.

Revoking an S-Corp election is a deliberate, five-year decision, not a quick form filing. Here's how physicians unwind the election cleanly: when it makes sense, the written statement the IRS requires, why the March 15 timing matters, the five-year wait before re-electing, and the C-Corp default that catches people who skip the classification step.

The IRS tax home rules for physicians decide whether your locums travel, lodging, and meals are deductible, and your contract sets the answer before you sign. A working guide to the one year temporary versus indefinite test and what changed for W-2 physicians.