12 Tax Mistakes Physicians Make (and How to Avoid Them)

1. Treating tax as a once-a-year event. Most strategies must be in place before December 31. See planning vs. preparation.
2. Leaving retirement plan space unused. A 457(b), a spouse's plan, a solo 401(k) for side income or a cash balance plan are often available but unused.
3. Missing the state PTET election. For practice owners in high-tax states this can cost tens of thousands of dollars a year.
4. Electing an S corporation too early or paying the wrong salary. Too little income makes it unprofitable; too low a salary invites audit.
5. Breaking the backdoor Roth with the pro-rata rule. An old rollover or SEP-IRA makes most of the conversion taxable.
6. Expecting rental losses to offset salary. Without short-term rental or real estate professional status, losses are usually passive and suspended.
7. Underpaying estimated taxes on 1099 income. Physicians with AGI over $150,000 need to pay 110% of last year's tax to use the safe harbor.
8. Ignoring state and city taxes when choosing a job. The same offer can be worth very different amounts in Texas, California or Philadelphia.
9. Misclassifying locums travel. Travel is deductible only away from your tax home.
10. Giving cash instead of appreciated stock. Donating appreciated shares avoids capital gains tax as well as producing a deduction.
11. Selling a practice without planning the allocation. The difference between goodwill and non-compete or consulting payments can be capital gain versus ordinary income.
12. Using advisors who do not talk to each other. Investment, insurance and tax decisions made in isolation often work against each other.

This article is for general educational purposes and is not tax, legal or investment advice. Tax law changes often and its application depends on your facts. Figures reflect 2026 rules as published by the sources listed above. Consult a qualified professional before acting. See our editorial policy.