Doctor Taxes: Handling an Unexpected Tax Bill

A sign displaying the word "TAXES" sits on a spread of various U.S. dollar bills.

Doctor taxes can be extremely complicated: your personal tax bill will be highly dependent on how you are employed, whether you are a partner, a W2 employee, a 1099 contractor, or have some combination of ownership stakes and salary which complicate your taxable status.  

We do not offer tax planning advice nor do we advise on tax saving strategies. That type of advice is well covered by professionals in the field! However, we have worked with many doctors who – despite careful planning – have had large tax bills that come up after all taxable income and deductions.  

Options for paying doctor taxes 

If that unexpected tax bill comes up, it’s important to understand the options available to you: 

IRS Short-Term Payment Plans 

The IRS will allow a short-term payment plan if you can pay within 120 days.  

IRS Long-Term Payment Plans 

Similar to the short-term option but for payments over 120+ days.  

  • Depending on which long-term options you choose, you will owe a setup fee.  
  • You will have to set up monthly withdrawals.
  • Additionally, users may incur a penalty of up to 25% of the unpaid amount
  • As well as interest equal to the federal short-term rate plus 3% which accrues until the tax is paid in full

Physician Personal Loans 

Once calculating all applicable fees, the associated interest for late payments plus the interest on unpaid taxes – not to mention putting yourself on the ‘naughty’ list for the IRS (not exactly a list you want to be on for any amount of time) – you may determine that the actual APR (not to mention reputational risk) on paying your taxes in full is significantly higher than expected.  

In that case, an easy and quick option to consider is a personal loan for physicians. Personal loans can get cash into your bank account in a matter of days with no upfront collateral. You can use those funds immediately to pay off your taxes. The installment loan will have very clear APR terms so you’ll know exactly how much you will owe each month. Additionally, you will want to consider loan options with no pre-payment penalties. That way as soon as you are able to pay off the loan, you will not owe anything further.  

Taxes come for all of us and can vary widely. Consult your tax and accounting professionals to determine the proper way to handle your taxes and any associated payments. Doc2Doc Lending is here to help with personal loan solutions for residents, fellows, dentists and doctors. 

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