Tax Planning for Medical Residents and New Attending Physicians

How you repay your student loans is one of the most consequential tax decisions you will make during training. If you work for a qualifying employer, such as a 501(c)(3) hospital, government entity, or academic medical center, Public Service Loan Forgiveness (PSLF) may forgive your remaining federal balance after 120 qualifying payments. Under current law, PSLF forgiveness is not taxable. If you are pursuing PSLF, your goal is to minimize monthly payments through an income driven plan, not pay down the balance aggressively.

If PSLF does not apply, standard forgiveness under income driven plans occurs after 20 to 25 years, and the forgiven amount may be treated as taxable income. The tax implications of each path differ significantly, and the decision should be made with your full tax picture in view.

Residency is one of the only windows in your career when your income may be low enough to contribute directly to a Roth IRA. Once your income exceeds the contribution limits, direct Roth contributions are no longer available and the backdoor Roth process becomes necessary.

Contributions made during training grow tax free for the rest of your career. Even modest annual contributions during residency and fellowship add up to meaningful tax free growth over 25 to 30 years of compounding. This is a window that closes and does not reopen.

For a full walkthrough of Roth IRA options at every income level, see our Physician Retirement Tax Guide.

Many residents and fellows earn additional 1099 income through moonlighting shifts, subject to self employment tax on top of federal and state income tax. Even modest moonlighting income opens planning opportunities, including establishing a business entity, electing S-Corp tax treatment, and opening a Solo 401(k) for retirement contributions beyond your employer plan.

If you moonlight or plan to, see our 1099 physician tax page for a full guide on structuring independent contractor income.

The jump from resident salary to attending compensation is one of the largest single income increases most physicians experience. First year attending moves include maximizing employer retirement plan contributions from day one, starting backdoor Roth contributions, reviewing your student loan repayment plan, and understanding how your new tax bracket changes the value of deductions and credits. For a closer look at how brackets affect physicians, see our physician tax brackets guide.

Your tax team should be in place before your attending income starts, not after your first filing season reveals missed opportunities

How you pay for disability insurance affects whether benefits are taxable if you ever collect. Premiums paid with after tax dollars produce tax free benefits. Premiums paid with pre-tax dollars or by your employer produce taxable benefits. Understanding this before you purchase ensures the policy is structured correctly.

Many residency programs offer group coverage, but the limits and own occupation definitions are often insufficient for attending level income. Supplemental individual policies purchased during training can lock in favorable rates. For a broader look at deductions available to physicians, see our physician tax deductions guide.

Most residents do not think they need a tax team yet. But the decisions that carry the most long term value, including loan repayment, Roth timing, moonlighting structure, and transition planning, benefit from expert input before you make them. Establishing a relationship with a physician specific tax team during training means your team already knows your situation when attending income arrives, with no onboarding delay and no missed opportunities in your first high income year.