Six Ways an S Corporation Election Can Go Wrong for Physicians
Electing S corporation status can be a valuable tax strategy for physicians with profitable 1099 or practice income. But the election itself is deceptively simple. Form 2553 is only a few pages long, yet small procedural mistakes can create problems that do not become apparent until months—or even years—later.
Here are six of the most common ways I see S corporation elections go wrong.
First Time Abatement Is Changing: What Doctors Should Know
Doctors who pay a tax penalty often assume there is nothing they can do about it. Fortunately, the IRS has historically offered a relatively generous administrative waiver called First Time Abatement (FTA).
Beginning in 2026, the IRS is transitioning FTA to a new system called the Automatic Exemption from Penalty (AEP). The underlying lesson is the same: if you have a good compliance history, one mistake may not have to cost you thousands of dollars.
Don't Let Your S Corp Take the Wheel: Why Business-Owned Cars Can Drive Up Your Taxes
When physicians and other business owners elect S corporation status, one of the first questions they ask is:
"Should I put my car in the business?"
It seems logical. If the business uses the vehicle, shouldn't the business own it?
Surprisingly, the answer is often no.
While there are situations where S corporation ownership makes sense, personally owning your vehicle and using an accountable plan is frequently the cleaner, more tax-efficient option.
Section 105 Medical Reimbursement Plans: A Powerful but Narrow Strategy for Physician Families
Most solopreneur physicians are familiar with the self-employed health insurance deduction. If you are self-employed and pay for your own health insurance, you may be able to deduct the premiums above the line instead of treating them as an itemized medical expense. That is valuable, especially for physicians buying coverage on the individual market, but it has limits. It generally does not allow you to deduct all out-of-pocket medical expenses, and it does not turn every family healthcare cost into a business deduction.
Why Your Marginal Tax Rate Isn’t 24%
Most people quote their marginal tax rate from the federal tax brackets. But your true marginal rate is the sum of several layers of taxes—federal, state, payroll, and sometimes even city. And your marginal rate can differ depending on whether the income is earned (salary or self-employment), passive (investments), or from a business.
The Self-Employed Physicians’ Guide to the OBBBA Part III: Charitable Donations
In other words, the changes to the SALT deduction by themselves change how we look at charitable donations. What’s more, the OBBBA has introduced a couple of fairly minor changes to how charitable donations are deducted. Importantly, these take effect in 2026 (the change to the SALT deduction takes effect in 2025). Because they are both calculated on the same schedule of the tax return, and the total is compared with the standard deduction, there is significant interplay between them in a holistic tax plan that optimizes for 2025 and future years.
The Self-Employed Physicians’ Guide to the OBBBA Part I: The New $40k SALT Cap Deduction
For most taxpayers, the largest tax obligation they pay at the state/local level is their state income tax.
