.png)
Welcome to the latest episode of the Physician Cents Podcast, where we explore complex financial topics tailored specifically for physicians. Whether you're a medical student, resident, fellow, or attending physician, you're going to find valuable insights that can help you increase your financial IQ, further your financial journey, and improve your overall well-being. Hosted by Chad Chubb and Tyler Olson, let’s dive in!
Watch this episode instead (Don’t forget to subscribe 🙏):
Listen to this episode instead (Once you love it (we know you will 😉), please leave us a review):
Follow Us:
Join the Physician Cents Newsletter: Conversations helping graduating medical students to attending physicians build a strong financial foundation
🚨 Looking for help with Disability Insurance, Physician Banking, Student Loan Refinancing, Physician Mortgages, Contract Reviews, and more? Check out our "Best of the Best" sponsors page to find a list of the professionals Chad & Tyler team up with for their clients.
The tax mistakes that hurt physicians most often are not the flashy ones. They're the quiet errors that sit in the background, then show up later as a surprise bill, a missed deduction, or a pile of stress at filing time.
This final stretch of the Physician Cents tax series, shared during the podcast's 50th episode🎉, focused on six issues that are easy to miss and expensive to ignore. Let's walk through the ones that keep coming up for doctors.
In this post, we cover mistakes #13 through #18 from Tyler's Tweet.
"Most physicians can't deduct losses unless they qualify as a real estate professional."
That line catches a lot of attention because the upside sounds amazing. Rental real estate can create depreciation, and depreciation can offset rental income. In the right setup, it can do far more than that. That's the part people love.
The part they often miss is the wall between passive losses and W-2 income. Many physicians hear about real estate tax benefits and assume buying one rental property will slash their tax bill. Usually, it doesn't work that way.
The big win comes when a household qualifies for real estate professional status and can use those losses more broadly. That can be powerful. It can also be a lot more work than the social media version makes it sound.
This isn't a checkbox strategy. It takes time, planning, and strong records.
For many households, the most workable setup looks like this:
That last piece matters. The IRS is not going to count casual activity or vague memories. Running out to buy an air filter is not the kind of work that carries this strategy.
We also need to remember the lifestyle side of this. To make real estate professional status work, someone in the household is doing real estate like a job. That's not passive income. That's a second career with calendars, records, property issues, and tenant headaches.
For a physician family that truly wants that life, it can fit. For a family chasing a tax headline, it often falls apart fast.
If you want a physician-focused look at the rules and tradeoffs, this real estate professional status guide for physicians gives a helpful overview.
The headline is exciting. The day-to-day is where the truth shows up.
We've seen the same pattern over and over. A physician buys one rental, learns how much work it takes, then decides one is enough. That is a perfectly normal outcome. It's also why so many tax plans built around real estate never get off the ground.
The other trap is paying thousands of dollars for education before learning the basics. Some doctors spend big money on courses, then find out the structure won't fit their schedule, family setup, or appetite for hands-on property work.
If the tax strategy only works when someone in the household is doing real estate like a job, it's not passive.
That doesn't make real estate bad. It simply means the tax angle should follow the real plan, not the other way around.
The HSA gets a lot of love, and for good reason. It's often called the only triple tax-free account because contributions can go in pre-tax, growth can happen tax-free, and qualified medical withdrawals can also come out tax-free.
That's a great deal. Still, we can't start with the account. We need to start with the health plan.
An HSA usually comes with a high-deductible health plan. That can be a strong fit for healthy households with low medical use. It can be a poor fit for families with ongoing prescriptions, frequent visits, or higher recurring costs.
This is the tradeoff physicians need to look at first. If we choose a high-deductible plan only because the HSA sounds appealing, but then we spend far more out of pocket during the year, the tax benefit may not make up for it.
That's why the first question is simple: how much care does the household use right now?
Preventive care usually still gets covered, which helps. But beyond that, many high-deductible plans mean we're paying for a lot before insurance meaningfully kicks in.
When the plan fits, the HSA can be one of the best accounts physicians have. The mistake is treating it like a checking account and draining it every year.
A stronger use is to invest the balance and let it grow for future health costs. That shifts the HSA from "medical spending account" to "future medical war chest," which is where its tax power really shines.
There's also the receipt question. Some people save every last pharmacy slip for decades. We tend to think the better move is saving the big receipts and skipping the tiny ones. If a large out-of-pocket bill comes along, keeping that record gives us the option to reimburse ourselves later, after the money has had more time to grow.
That can mean a physical folder, a digital folder, or both. It doesn't need to be fancy. It needs to be findable.
For many physicians, the long-term view makes the most sense. Health costs usually rise with age. Long-term care is expensive. Even a large HSA balance may have a future job to do without us forcing the issue early.
In that sense, the HSA can act almost like a backup pool for later-life care. That's not formal long-term care insurance, of course, but it explains why many high earners are not eager to tap the account for every small expense along the way.
The account is powerful. The plan fit comes first.
Few tax topics sound less exciting than a W-4. Yet this little form has an outsized effect on how smooth or painful tax season feels.
When physicians don't update withholding after a marriage, a child, a job change, or a pay shift, the result is often the same. A surprise tax bill shows up when it's least welcome. Sometimes the reverse happens and the refund is huge, which may feel better emotionally, but still means too much cash sat with the IRS during the year.
A steady paycheck is one thing. Physician income is often not that clean.
We see all kinds of moving parts, including:
That last one matters more than many people think. If we're married on December 31, the IRS treats us as married for the whole tax year. So a late-year marriage can change the tax picture for the full year, not only the final month or two.
There's also the multiple-employer issue. One W-4 only "sees" the job it belongs to. It has no built-in awareness of the other paycheck, the side income, or the bonus somewhere else. If we don't add that information manually through withholding adjustments, the math can miss by a lot.
The dream system would be simple, of course. The IRS would know exactly what we owe and withhold it perfectly. We are not there.
This is where expectations help. Many physicians won't dial it in perfectly on the first pass. That's fine.
Sometimes we update the W-4, watch the next few pay periods, review the return, then make another tweak. Uneven income makes this normal.
A good rule of thumb is to revisit withholding after any major life or income change. This W-4 guide for physicians covers common scenarios in plain English.
The form itself is not exciting. The control it gives us is.
Physicians love Roth accounts. We get it. Tax-free growth sounds great, and the word "tax-free" has a way of winning the room.
Still, tax diversification is better than Roth obsession.
That idea matters most for high earners. If we're already in the top federal brackets, and maybe also paying high state income tax, giving up a current deduction can be a steep price.
For physicians in a 35 percent or 37 percent bracket, pre-tax contributions often deserve first place. If state taxes are high too, the case gets stronger.
This is where the Roth conversation gets muddy. People hear "Roth is better" and stop there. But retirement accounts don't work in a vacuum. The right answer depends on current income, future income, state taxes, practice structure, available plans, and what retirement could look like later.
Private practice physicians may also have access to more pre-tax space through a cash balance plan or other plan design. That can tilt the math even more toward deferring taxes now.
W-2 physicians with access to a mega backdoor Roth are a different case. If the pre-tax options are already filled up, then post-tax dollars flowing to Roth can make more sense. That doesn't mean Roth is always best. It means the order of operations matters.
The backdoor Roth IRA still gets plenty of love because it usually doesn't crowd out pre-tax space. It adds Roth money without forcing a worse trade elsewhere.
For a deeper physician-focused comparison, this traditional versus Roth 401(k) guide for physicians lays out the common decision points.
This is the piece many high-income physicians miss. The tax rate we pay while working is not automatically the tax rate we'll pay forever.
There may be a large window between retirement and required minimum distributions. During those lower-income years, Roth conversions can let us move money from pre-tax to Roth at lower rates than we faced while working.
That's why future flexibility matters. If tax rates stay the same forever, pre-tax versus Roth is not magic by itself. The tax bill can come out surprisingly similar. What changes the result is movement over time, either in tax rates or in our own income.
That uncertainty is why we keep coming back to diversification. Some pre-tax money. Some Roth money. Room to adjust later. Less all-or-nothing thinking.
The goal isn't to win a Roth argument. The goal is to pay taxes at the best rates available over a full career and retirement.
This is one of the biggest misunderstandings in physician finance. Many people think their accountant is "doing tax planning" when the accountant is really doing tax filing.
Those are not the same thing.
Filing is backward-looking. It reports what already happened. Planning happens while the year is still alive, when choices can still change the outcome.
If the first tax conversation happens in March, most of the useful moves for the prior year are already gone. That's not a knock on accountants. It's the reality of the calendar.
During filing season, most firms are buried in returns. If we want help thinking through withholding, retirement plan decisions, business choices, or year-end moves, that work often needs to happen earlier.
This is especially true for physicians with:
On the other hand, some physicians truly do have simple returns. A straight W-2, clean withholding, maxed workplace plan, and no business income may not need much beyond solid filing.
That difference in complexity matters. Not everyone needs year-round tax work. Some absolutely do.
If you want a clean explanation of the scope differences, this piece on tax advisory versus tax preparation and planning is a helpful read.
The best tax conversations usually happen before the year ends, and often well before spring filing season ramps up.
That can include reviewing pay stubs, adjusting withholding, checking retirement contributions, looking at estimated taxes, and deciding whether a side business needs a different setup. For physicians with more moving parts, even October can be a much better time to start than March.
We also shouldn't confuse price with service level. Paying more for tax filing doesn't always mean we hired someone for ongoing planning. Sometimes it simply means the return is more complex or the firm is more expensive.
That distinction saves a lot of disappointment.
Here's the blunt version: no receipts usually means no deduction.
The IRS does not care that physicians are busy. It does not care that the deduction "sounds right." It wants proof.
This doesn't need to be fancy. It needs to be consistent.
A workable system might include a physical folder and a digital folder for each tax year. Some people like a 12-pocket accordion file, one section for each month. Others scan everything and keep it in cloud storage. Either can work.
The important part is staying organized while the year is happening, not trying to rebuild it all from memory during tax season or, worse, during an audit.
This matters even more for business owners and 1099 earners. If we pay children through the business, we need records showing the work was real. If the child helped shred papers, sort files, or assist with simple office tasks, that work should be documented like any other business activity.
It may feel silly to take a picture or save a note. It feels much less silly when someone asks for proof later.
The IRS makes the standard plain in its burden of proof guidance. The taxpayer has to support the entries and deductions on the return.
Most people won't get audited. That's true.
Still, the point of good documentation isn't only audit odds. It's stress reduction. A simple filing system turns a messy, emotional scramble into routine maintenance.
It also protects against penalties and interest if questions come up years later. By then, memory is worse, receipts are gone, and the cleanup gets painful in a hurry.
We don't need a heroic system. We need one we'll keep using.
That's the thread running through all six of these issues. Real estate sounds easier than it is. HSAs look great until the health plan doesn't fit. W-4s sit untouched. Roth gets over-loved. Filing gets mistaken for planning. Receipts disappear.
The fix is not turning tax planning into a second residency. It's building enough structure that the big mistakes never get room to grow. For physicians, that usually means simple systems, better timing, and less chasing of flashy tax ideas.
The best of the best list is a paid sponsorship, but these are professionals/companies that Tyler and Chad collaborate with within their own practices or have been vetted to earn a spot on this list. By supporting our sponsors, it allows Chad & Tyler to dedicate more time to you and the Physician Cents community. If you ever have a question (or not a great experience, which we don’t expect!) about a sponsor, please let us know. We call it the “best of the best” for a reason, and we will maintain that standard for our listeners & viewers.
This information is for general purposes only. This information is not intended to be a substitute for specific professional financial, tax, or legal advice, as individual circumstances vary. Please see a financial professional, CPA, and/or an attorney in regards to your own individual situation.
Wealthkeel’s Advisory Services and Financial Planning offered through Vicus Capital, Inc., a Federally Registered Investment Advisor. WealthKeel LLC, 615 Channelside Drive, Suite 207, Tampa, FL 33602 -- 267.590.9533.
Olson Consulting LLC, Offering Advisory Services and Financial Planning, is a State-Registered Investment Advisor.
A podcast designed specifically for physicians, offering a breakdown of complex financial topics to help you develop your financial IQ, further your financial journey, and improve your well-being. Whether you're a medical student, resident, fellow, or attending physician, you're sure to learn something new that will benefit your journey.
.png)
Conversations helping graduating medical students to attending physicians build a strong financial foundation
