How to make money in psychiatry

[blazing]

Hey all:

I'm currently in psychiatry residency and while I am liking it, the financial aspect of the job is getting to me. My classmates in surgical and more competitive specialties are getting WAY higher offers than me. I know the simple answer is that I should have probably picked a more high paying specialty. Putting aside finding happiness with lower salary, can I get some advice for me to make as much money as ophthalmology or dermatologist being a psychiatrist? I dread the idea of going back to do IM and subspecialize in Cards. I also dread the idea of going to MBA and then do finance or something. What's the feasibility of making tons of cash opening my own practice and having others work for me? What's the best/quickest route? Thanks all.

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[wolfvgang22]

I buy Gamestop stock. I like the stonk. Then I hold it with 💎 ✋ and 🚀.

 

[HemeOncHopeful19]

Needs way more info. How much are you getting offered and where are you trying to live doing what kind of job?

 

[Stagg737]

You can open your own practice, but to really make bank will take at least a few years. Probably one of the most reliable ways to make top dollar though is through building and owning/managing a large clinic. Easiest way is probably to take a typical 30 hr/week job at decent to above average pay for psych and pick up moonlighting shifts. Or just do locums, but that has it's own problems. You should be able to hit $350k/yr pretty easily if you're willing to put in the hours surgery does.

Why do you care about their salary anyway? Figure out how much you need to make you happy and shoot for that.

 

[box8psych]

Peruse some of the other threads here and there is a plethora of great advice and examples of how to maximize income that rivals some of those other higher-paying specialties. Like Stagg737 said, hustling in private practice is probably the best way, but if you really are that concerned with making high 6 figures, you picked the wrong specialty.

 

[WisNeuro]

IMEs

 

[Mad Jack]

Who needs GME when you've got $GME

Really though, geographic flexibility and good bargaining skills can go a long way, as can business savvy and knowing how to market. Biggest earning psych doctor out here makes well past the million mark theough years of hard work building a practice that works for him.

 

[Sushirolls]

Wanting to make 1M+ per year on first year out of residency

Well TexasPhysician, That's partially them to blame as you mentioned, they didn't negotiate well. There is always a way to get the rates you want if you are willing to make the sacrifices. You said it yourself. They are pleased to work at home. They don't feel the need to negotiate further...

forums.studentdoctor.net

Read this thread ^

Now, we can close this thread.

 

[hallowmann]

I buy Gamestop stock. I like the stonk. Then I hold it with 💎 ✋ and 🚀.

This is The Way.

 

[Stagg737]

IMEs

I'm actually curious about the time it takes to perform a psych IME and reimbursement rates. Any idea what the rate is?

In a past life I worked for an orthopedics group that did IMEs and were paid $900 per 15 minute appointment. We did the math on one doc who did them all day 3 days a week and his income on that alone was something like $900k for the first 5 months of that year. Ironically, he later broke off from the group to try and start his own practice then crashed and burned bad.

This is The Way.

Ftfy, gogo

 

[hallowmann]

I'm actually curious about the time it takes to perform a psych IME and reimbursement rates. Any idea what the rate is?

In a past life I worked for an orthopedics group that did IMEs and were paid $900 per 15 minute appointment. We did the math on one doc who did them all day 3 days a week and his income on that alone was something like $900k for the first 5 months of that year. Ironically, he later broke off from the group to try and start his own practice then crashed and burned bad.



Ftfy, gogo

Fixed, haha

 

[WisNeuro]

I'm actually curious about the time it takes to perform a psych IME and reimbursement rates. Any idea what the rate is?

I only know the range of rates in my niche. But, in that niche, the amount I make in 1 day of IME work, is more than I made in a week of FT hospital work at my old hospital job. And that's just for the basic eval, depo, travel, etc is all extra.

 

[watto]

I only know the range of rates in my niche. But, in that niche, the amount I make in 1 day of IME work, is more than I made in a week of FT hospital work at my old hospital job. And that's just for the basic eval, depo, travel, etc is all extra.

The best passive source of income in IMEs for me has been scheduling for depositions or testimony and having it canceled within the 10 business days necessary to have me paid 50% of my fee. I love being paid for doing nothing (and I usually fill the time with other work, so bonus).

 

[WisNeuro]

The best passive source of income in IMEs for me has been scheduling for depositions or testimony and having it canceled within the 10 business days necessary to have me paid 50% of my fee. I love being paid for doing nothing (and I usually fill the time with other work, so bonus).

Yeah, my no-show fee is almost the entire cost of the eval. So, I just wait until that window hits to begin record review. I hated no shows in clinical/salaried world, I love them now.

 

[romanticscience]

I put this together from a recent IME survey from SEAK. The original data only had avg price and minutes. What struck me was how much more time psychologists spent compared to psychiatrists. I'm assuming it's because of the testing components.

	Avg	Minutes	Hours	Per Hour
Neuropsychiatry	$12,000.00	1000	17	$720.00
Forensic Psychiatry	$2,850.00	451	8	$379.16
Psychiatry	$2,189.00	412	7	$318.79
Neuropsychology	$4,913.00	1832	31	$160.91
Forensic Psychology	$4,675.00	3137	52	$89.42
Psychology	$3,996.00	1918	32	$125.01

 

[WisNeuro]

The per hour is WAY lower than anyone I know charges. There may be a difference between boarded and not, but I don't know anyone who would touch an IME at that rate. Time is somewhat high for most run of the mill cases

 

[romanticscience]

The per hour is WAY lower than anyone I know charges. There may be a difference between boarded and not, but I don't know anyone who would touch an IME at that rate. Time is somewhat high for most run of the mill cases

Yea, that did seem off. Maybe there was an error with the average minutes per IME, which IMO was an odd way to publish time per IME.

When I was starting out my consulting practice, it was super helpful to learn about how many hours these things run on average. There are a handful of attorneys who want to know "how much is this going to run me."

 

[WisNeuro]

Yea, that did seem off. Maybe there was an error with the average minutes per IME, which IMO was an odd way to publish time per IME.

When I was starting out my consulting practice, it was super helpful to learn about how many hours these things run on average. There are a handful of attorneys who want to know "how much is this going to run me."

Depends on complexity of case and how many pages of records I have to sift through. In my experience and in discussions with colleagues, the review, eval, and report averaged 9-12ish for fairly straightforward stuff without a butt ton of notes.

 

[WisNeuro]

We had a recent salary survey that asked about avg eval times. For forensic reports, avg time was 13.4, but 5.3 SD.

Also, our internal hourly numbers according to the survey are more than twice what SEAK is quoting.

 

[tortuga87]

One route is to get really good at therapy and med management, then cash only private practice as one of the best providers in town + work surgery hours. You want the lawyers, businessmen, engineers, doctors coming to you, recommending you to their friends. At the same time, get good at identifying and investing in breakthrough companies as early in life as possible. Be cash poor but asset rich.

 

[robellis]

One route is to get really good at therapy and med management, then cash only private practice as one of the best providers in town + work surgery hours. You want the lawyers, businessmen, engineers, doctors coming to you, recommending you to their friends. At the same time, get good at identifying and investing in breakthrough companies as early in life as possible. Be cash poor but asset rich.

The latter part of your post is very difficult to do and is essentially what wall street speculators spend their life trying to accomplish, not a good, reliable way to become rich

 

[jbomba]

Can't you just take any one of the plethora of 200/hr locum jobs and work 40-50 hrs a week and make your 4-500k pretty consistently?

 

[psychacad]

Can't you just take any one of the plethora of 200/hr locum jobs and work 40-50 hrs a week and make your 4-500k pretty consistently?

Yes, fairly easy to get 400k with a 40-50 hour work week. Key is to avoid low paying salaried positions and work per diem or locums.

 

[When is graduation again?]

The latter part of your post is very difficult to do and is essentially what wall street speculators spend their life trying to accomplish, not a good, reliable way to become rich

True. Plus it's technically not necessary. You could take a number of investing approaches and make a ton of money. Buffet invests in the most basic companies like Kraft, coca-cola, and Geico. The most important aspect of investing approach would be to make sure you read a lot and understand the basics of balance sheets. If OP is interested, I have a ton of book recommendations. An MBA is not needed at all.

No disrespect, but I feel like we get these threads so often, that I'm not sure why this is something OP is just now thinking about. Perhaps alternative questions are: how much money do you need? What do you want to do with the money? And what is it about your friends making more money in alternative specialties, that bothers you?

 

[FatherPsychiatry]

Keep in mind that people throw these numbers around like 250k, 350k, 500k without any context, especially in regards to employment vs self employed, w2 vs 1099, partnership, and even w2 vs w2 the benefits package differences can be enormous between two positions.

As an example, I was looking at a roughly identical role at the same place for an inpatient gig, but had the option of going in as a contractor (1099) or employee (W2). The "pay" would roughly come out to $380k for contractor, vs $240k for employee. But as an employee, my entire family's health / dental / vision is paid for, I get a large match to a 401k, the ability to contribute to a 457b, malpractice is covered, some basic disability / life insurance (although I do have my own separate policies,) and many others. Employees are also part of a union so I have to pay some dues, but they got us some nifty benefits due to COVID, such as being allowed to work from home 1-2 days a week, whereas the contractors had to come in every day (and also cover floor issues for the employee psychiatrists working from home) or they don't get paid. But there's a whole host of things that contractors get to write off on their tax returns which employees don't.

Obviously everything is dependent on the specific position, but keep this in mind when you hear these income numbers thrown around. It is not that straightforward.

 

[psychacad]

Keep in mind that people throw these numbers around like 250k, 350k, 500k without any context, especially in regards to employment vs self employed, w2 vs 1099, partnership, and even w2 vs w2 the benefits package differences can be enormous between two positions.

As an example, I was looking at a roughly identical role at the same place for an inpatient gig, but had the option of going in as a contractor (1099) or employee (W2). The "pay" would roughly come out to $380k for contractor, vs $240k for employee. But as an employee, my entire family's health / dental / vision is paid for, I get a large match to a 401k, the ability to contribute to a 457b, malpractice is covered, some basic disability / life insurance (although I do have my own separate policies,) and many others. Employees are also part of a union so I have to pay some dues, but they got us some nifty benefits due to COVID, such as being allowed to work from home 1-2 days a week, whereas the contractors had to come in every day (and also cover floor issues for the employee psychiatrists working from home) or they don't get paid. But there's a whole host of things that contractors get to write off on their tax returns which employees don't.

Obviously everything is dependent on the specific position, but keep this in mind when you hear these income numbers thrown around. It is not that straightforward.

Fair point, but even when you factor benefits, there is no way that can make up for a 140k difference in pay (maybe the covid stuff, but this an exceptional time). You also get to deduct health insurance with a 1099 and can work shiftwise..etc and put in more for retirement. With benefits there are also contract shackles and less freedom. I really think independent contractor makes more sense in most cases, especially when you have the freedom to pick and chose. The last part is critical as the cost will be less job security , but when you can contract with several hospitals and spread your risk, you're actually at an advantage.

Per diem W2 is also another option. You will be paid at a higher rate than a full/part time salaried position with some benefits, though not as extensive (can get an employee 401k with no match, as an example).

 

[calvnandhobbs68]

Fair point, but even when you factor benefits, there is no way that can make up for a 140k difference in pay (maybe the covid stuff, but this an exceptional time). You also get to deduct health insurance with a 1099 and can work shiftwise..etc and put in more for retirement. With benefits there are also contract shackles and less freedom. I really think independent contractor makes more sense in most cases, especially when you have the freedom to pick and chose. The last part is critical as the cost will be less job security , but when you can contract with several hospitals and spread your risk, you're actually at an advantage.

Per diem W2 is also another option. You will be paid at a higher rate than a full/part time salaried position with some benefits, though not as extensive (can get an employee 401k with no match, as an example).

Why bother with an employee 401k with no match when you can just do an individual 401k as a contractor? they're both tax deductible.

I agree the one place I've been offered 1099 instead of W2 the salary difference would be huge (like as much as noted above...140K+ a year difference). The big benefits of W2 are how good is the health insurance plan (and really doing a head to head comparison on how much you're paying for premiums/deductibles vs scoping out market plans), how good is the retirement plan and any extra fringe benefit stuff. Dental/vision insurance is ridiculously cheap on your own (I wear glasses/contacts and I don't even bother with vision insurance because I break even most of the time vs just buying contacts/glasses cash and deducting from my HSA). Malpractice is negligible with psychiatry relative to other specialities. Disability insurance through employers tends to suck and should get your own policy anyway. People really overestimate self-employment tax which becomes negligible at higher salaries.

A major part of W2 is that the employer does have an employer/employee obligation to you. So for instance, as noted above, you can be part of a union or they have to go through a lot more due process before firing you. As a 1099 contractor, they can cut you off pretty quickly with little/no notice...they essentially have no employer obligation to you and you're protected by no employer/employee relationship. Think of it as hiring/firing your plumber. If you want to get a new plumber, you just do it.

 

[psychacad]

Why bother with an employee 401k with no match when you can just do an individual 401k as a contractor? they're both tax deductible.

I agree the one place I've been offered 1099 instead of W2 the salary difference would be huge (like as much as noted above...140K+ a year difference). The big benefits of W2 are how good is the health insurance plan (and really doing a head to head comparison on how much you're paying for premiums/deductibles vs scoping out market plans), how good is the retirement plan and any extra fringe benefit stuff. Dental/vision insurance is ridiculously cheap on your own (I wear glasses/contacts and I don't even bother with vision insurance because I break even most of the time vs just buying contacts/glasses cash and deducting from my HSA). Malpractice is negligible with psychiatry relative to other specialities. Disability insurance through employers tends to suck and should get your own policy anyway. People really overestimate self-employment tax which becomes negligible at higher salaries.

A major part of W2 is that the employer does have an employer/employee obligation to you. So for instance, as noted above, you can be part of a union or they have to go through a lot more due process before firing you. As a 1099 contractor, they can cut you off pretty quickly with little/no notice...they essentially have no employer obligation to you and you're protected by no employer/employee relationship. Think of it as hiring/firing your plumber. If you want to get a new plumber, you just do it.

That's true, but you can do the same to them as well. You can cut them off and move on with little notice. So, yes job security is a cost, but you will get more freedom and less shackles (say with things like noncompete...etc). When you have choice and you can find a job in no time like it's the case now in psychiatry, this imo puts you at an advantage. You can also contract with several hospitals and spread your risk if one decides to drop you. A very good individual plan will cost you what? 10k? The average family plan is 15k? health insurance is definitely the most costly "benefit", but it doesn't make up the difference in pay/freedom..etc, imo. An employer/employee relationship isn't always to the advantage of the employee.

I agree 1099 would be a better option than W2 per diem, but it's sort of an in-between where you still get paid at a higher rate/have more freedom, and get some benefits.

 

[PsyDr]

I put this together from a recent IME survey from SEAK. The original data only had avg price and minutes. What struck me was how much more time psychologists spent compared to psychiatrists. I'm assuming it's because of the testing components.

	Avg	Minutes	Hours	Per Hour
Neuropsychiatry	$12,000.00	1000	17	$720.00
Forensic Psychiatry	$2,850.00	451	8	$379.16
Psychiatry	$2,189.00	412	7	$318.79
Neuropsychology	$4,913.00	1832	31	$160.91
Forensic Psychology	$4,675.00	3137	52	$89.42
Psychology	$3,996.00	1918	32	$125.01

Not even close to reality.

 

[WisNeuro]

Not even close to reality.

Come to think of it, I don't know anyone in my circle who is a SEAK person. Searched my area, not a single boarded provider in their directory here. I'm curious where they are even getting those numbers.

 

[jbomba]

Regarding 1099 work, have a good friend who shares finances and taxes with me. He's not a physician but makes comparable money - 350k last year. His accountant has it so he's paying 25% in total taxes. He's also in a high income tax state. He's using a bunch of loopholes to get there but it's all above board. No way someone is bringing home anything close to 260k a year on a 350k annual salary as a W-2. With a good accountant I'm failing to see how 1099 doesn't always beat w2 hands down unless you're getting a fantastic pension. Especially so if you have a working spouse who can provide health insurance, etc.

 

[PsyDr]

Come to think of it, I don't know anyone in my circle who is a SEAK person. Searched my area, not a single boarded provider in their directory here. I'm curious where they are even getting those numbers.

I was dumb enough to buy this SEAK reference to see what everyone else was charging.

IIRC, the n<10.

Psydr doesn't get out of his proverbial IME bed for $5k . Things are standardized enough that if I ever put 52 hours into a case, it is because it is super complicated or I am VERY mad.

 

[romanticscience]

Come to think of it, I don't know anyone in my circle who is a SEAK person. Searched my area, not a single boarded provider in their directory here. I'm curious where they are even getting those numbers.

It was based on a survey; if you completed it, they share the results. I just completed an expert witness hourly rate one. I'm curious to see what that looks like.

 

[FatherPsychiatry]

Fair point, but even when you factor benefits, there is no way that can make up for a 140k difference in pay (maybe the covid stuff, but this an exceptional time). You also get to deduct health insurance with a 1099 and can work shiftwise..etc and put in more for retirement. With benefits there are also contract shackles and less freedom. I really think independent contractor makes more sense in most cases, especially when you have the freedom to pick and chose. The last part is critical as the cost will be less job security , but when you can contract with several hospitals and spread your risk, you're actually at an advantage.

Per diem W2 is also another option. You will be paid at a higher rate than a full/part time salaried position with some benefits, though not as extensive (can get an employee 401k with no match, as an example).

All of these are very fair points. I just wanted to caution any residents in the job hunt to consider these factors and get some advice pertinent to their specific situation. My feeling when talking to residents is that most don't consider them strongly enough, and focus on income as the only point of discussion.

 

[AD04]

Regarding 1099 work, have a good friend who shares finances and taxes with me. He's not a physician but makes comparable money - 350k last year. His accountant has it so he's paying 25% in total taxes. He's also in a high income tax state. He's using a bunch of loopholes to get there but it's all above board. No way someone is bringing home anything close to 260k a year on a 350k annual salary as a W-2. With a good accountant I'm failing to see how 1099 doesn't always beat w2 hands down unless you're getting a fantastic pension. Especially so if you have a working spouse who can provide health insurance, etc.

I was paid as 1099 and as w-2 so I have some experience in this. These broad statements of 1099 being better than w-2 is dangerous. 1099 is glorified more than it should. Part of it is due to the American dream of being your own boss. The other part is due to slick marketers, especially those who run law and accounting firms.

The appeal of being self-employed and taxes is that you can deduct your expenses and that can lower your taxes. But for each $1 of expenses, you are only getting a partial benefit through tax savings. However, as an employee, the expenses are paid for by the employer.

As 1099, you also have to factor in the cost of legal / accounting, employer portion of payroll taxes, various insurances. The main benefit of 1099 is that at a certain amount of money, $400k or more, you can incorporate and save on payroll taxes by taking earnings not as wages but as profit distribution. And that you can deposit more into retirement with your own 401k. You have to run the numbers to see if the extra complexity and expenses of incorporating is worth it.

Regarding w-2 $260k being equivalent to 1099 $350k, it depends on the details. Employer can match into 401k and match into HSA. Employer can pay for malpractice insurance. Employer can pay for a large part of health insurance and other benefits. CME funds. Student loan payments. Etc.

Can you share the loopholes your friend used? Can you give me an example with actual numbers?

 

[jbomba]

I was paid as 1099 and as w-2 so I have some experience in this. These broad statements of 1099 being better than w-2 is dangerous. 1099 is glorified more than it should. Part of it is due to the American dream of being your own boss. The other part is due to slick marketers, especially those who run law and accounting firms.

The appeal of being self-employed and taxes is that you can deduct your expenses and that can lower your taxes. But for each $1 of expenses, you are only getting a partial benefit through tax savings. However, as an employee, the expenses are paid for by the employer.

As 1099, you also have to factor in the cost of legal / accounting, employer portion of payroll taxes, various insurances. The main benefit of 1099 is that at a certain amount of money, $400k or more, you can incorporate and save on payroll taxes by taking earnings not as wages but as profit distribution. And that you can deposit more into retirement with your own 401k. You have to run the numbers to see if the extra complexity and expenses of incorporating is worth it.

Regarding w-2 $260k being equivalent to 1099 $350k, it depends on the details. Employer can match into 401k and match into HSA. Employer can pay for malpractice insurance. Employer can pay for a large part of health insurance and other benefits. CME funds. Student loan payments. Etc.

Can you share the loopholes your friend used? Can you give me an example with actual numbers?

Let me check and see what he says about specifics. I do know he has his wife and two young children on payroll which allows him to defer roughly 12k per (forget exact number).

 

[watto]

I was dumb enough to buy this SEAK reference to see what everyone else was charging.

IIRC, the n<10.

Psydr doesn't get out of his proverbial IME bed for $5k . Things are standardized enough that if I ever put 52 hours into a case, it is because it is super complicated or I am VERY mad.

My record for a chart was 30 lbs of paper, absolutely ridiculous, and I had to document review of every note (separately!) I am sure I was so mad at the end, it was coming through in my report.

 

[WisNeuro]

My record for a chart was 30 lbs of paper, absolutely ridiculous, and I had to document review of every note (separately!) I am sure I was so mad at the end, it was coming through in my report.

If they want to pay my fee for record review, I'll review a truckload of notes. It's dumb, but their call. If you want me to waste time quickly screening the 200 pages of ortho notes to make sure I'm not missing anything, be my guest, my billing will reflect such.

 

[watto]

If they want to pay my fee for record review, I'll review a truckload of notes. It's dumb, but their call. If you want me to waste time quickly screening the 200 pages of ortho notes to make sure I'm not missing anything, be my guest, my billing will reflect such.

I used to charge per inch of records, now I charge per page. The worst are chiropractor notes. What a load of gibberish.

 

[WisNeuro]

I used to charge per inch of records, now I charge per page. The worst are chiropractor notes. What a load of gibberish.

Seems to vary depending on where you're at. I just charge time spent. Too hard to estimate by size as the content will vary quite a bit. I can cruise pretty quickly past notes that aren't part of my eval/scope. But, if they've had multiple inpatient stuff, or I have to decipher the made up testing that speech and OT doing, takes a lot longer. Agree on the chiro thing, we have to deal with "functional chiropractors" who think they're neurologists.

 

[AD04]

The single most important thing you can do to be among the top 1% is to be an asset owner. I'm not going to tell you which assets to own but for the most part, assets of all types have appreciated in value and will continue to do so. And the appreciation will compound. This is due to systemic pressures that are irreversible. If there is demand for a full explanation of our political situation and the wheels of our economy and the changes technology will bring, I may start new post on it. But if the future continues on the present trajectory, the divide between the haves and the have-nots will only widen -- quite significantly.

Regarding the original question about wanting to make a lot in psychiatry ...

First, you are wrong about psychiatry being a low-paying specialty. For you it may be low-paying. But for me, it is high-paying. The intraspecialty difference in compensation is quite large.

The common denominator in making a lot in this specialty and pretty much in any specialty is to take calculated risk. Taking risk will involve traveling on the path less trodden. And to calculate if the risk is worth taking, you should be somewhat proficient at simple math (to the extent of multiplication and division -- calculus isn't needed). The math will help you understand the business model of how you are compensated. It really doesn't matter which business model you choose -- cash or insurance, outpatient or inpatient, in-person or telepsychiatry. But understand the appealing gigs also appeal to many others. So if you want to have a cash-based telepsychiatry outpatient practice, you will be competing with psychiatrists all over the nation. So what can you do differently that will draw patients to you? The thing that you do differently is the risk.

Within the specialty, the pay for a certain job is governed by supply and demand. The less appealing your job, the less competition you will have. And because there is less competition, you are better able to set the prices you want. This could be with insurance companies or with patients or with employers. But as in business, you get what you can negotiate. So you should brush up on your negotiation skills.

The exact details of each position is different but compensation structure should fall within 2 main categories: 1) productivity and 2) salary. Salary with productivity usually falls on one side of the spectrum and you have to do the math to see if it is more category 1 or category 2. Overall, if you're paid by productivity, you will want to maximize the $ / production unit and production unit / hr. The highest paid clinical postions are based on productivity. This is the appeal of private practice -- autonomy and high pay. But to get to that position, you have to be competent in a lot of aspects of running a business. If you are paid by salary, you want to negotiate a cap on the amount of work you do. If your pay it capped, it only makes sense that the work you do is capped as well. The lower the cap the better as you'll get more $ / production unit.

These all involves honing you business skills. Some people never learn it and they'll still be comfortable. But the people that make a lot are business savvy.

Most likely, you wouldn't get it right on the first try. So pick something appealing and learn as much as you can. And when you realize you can do better, don't be afraid to pivot.

 

[Marasmus1]

is it possible to make 300k as a full time child psychiatrist in Ohio major metropolitan areas? I definitely don't feel like working more than 32-40 hours a week. When I last

 

[Merovinge]

is it possible to make 300k as a full time child psychiatrist in Ohio major metropolitan areas? I definitely don't feel like working more than 32-40 hours a week. When I last

Yes, it's not only possible but probably around the median if you are working full-time. This is presuming you aren't trying to work in academics or something intentionally low paying.

 

[Merovinge]

I was paid as 1099 and as w-2 so I have some experience in this. These broad statements of 1099 being better than w-2 is dangerous. 1099 is glorified more than it should. Part of it is due to the American dream of being your own boss. The other part is due to slick marketers, especially those who run law and accounting firms.

The appeal of being self-employed and taxes is that you can deduct your expenses and that can lower your taxes. But for each $1 of expenses, you are only getting a partial benefit through tax savings. However, as an employee, the expenses are paid for by the employer.

As 1099, you also have to factor in the cost of legal / accounting, employer portion of payroll taxes, various insurances. The main benefit of 1099 is that at a certain amount of money, $400k or more, you can incorporate and save on payroll taxes by taking earnings not as wages but as profit distribution. And that you can deposit more into retirement with your own 401k. You have to run the numbers to see if the extra complexity and expenses of incorporating is worth it.

Regarding w-2 $260k being equivalent to 1099 $350k, it depends on the details. Employer can match into 401k and match into HSA. Employer can pay for malpractice insurance. Employer can pay for a large part of health insurance and other benefits. CME funds. Student loan payments. Etc.

Can you share the loopholes your friend used? Can you give me an example with actual numbers?

This is a really good point and I think can be missed by some people. It does certainly depend on the person/situation though. If you are working from home 1099 gives you a home office deduction that can be significant, if you travel to many sites the reimbursement per mileage can be very significant as well. You can turn every flight to a medical conference into a vacation to cover your airfare and the days the conference is running's hotel as pre-tax. Being able to max out the 401k is a much better situation than many employers these days (including my current situation which just clears 30k/year with their paltry match). You can get small breaks on things needed for work like a cell phone, laptop, etc but these are pretty small. If you are actually employing your children in a real manner there are certainly benefits to growing your family's overall wealth.

Most loopholes past that are just tax fraud that you found an accountant to sign off on. With how defunded the IRS is these days I guess this can be considered a positive EV risk but there's certainly some peace of mind to living life with integrity that I find hard to outvalue with $$.

 

[Marasmus1]

Yes, it's not only possible but probably around the median if you are working full-time. This is presuming you aren't trying to work in academics or something intentionally low paying.

I looked at some jobs in major Ohio teaching hospitals with fellows, residents and students and the average was around 200k with salaries as low as 180k for full time CAP Outpatient. I am assuming the workload in these places would be much less? Otherwise, it just does not click with me why somebody would take this compensation.

 

[Merovinge]

I looked at some jobs in major Ohio teaching hospitals with fellows, residents and students and the average was around 200k with salaries as low as 180k for full time CAP Outpatient. I am assuming the workload in these places would be much less? Otherwise, it just does not click with me why somebody would take this compensation.

Workload is less, ideally protected time for teaching/research, enjoy being around trainees to feel powerful/young or genuinely like to teach. "Prestige" pay cut (very good but not highest tier hospitals in Ohio make this really sad). Some people stay on as it's the only system they've known since graduating med school. This has been the standard model for academics, but I've seen it erode even in the past decade with less folks willing to take these huge pay cuts in the younger generations.

 

[psyguru]

IMEs

IMEs as well as expert witness work (some like med mal or Testamentary Capacity do not involve evaluations / IMEs).

 

[WisNeuro]

IMEs as well as expert witness work (some like med mal or Testamentary Capacity do not involve evaluations / IMEs).

For sure, I use IME in a broad sense. We also get requests for things such as capacity, record review, neuropsych autopsy, comments on whether or not another provider is commenting outside of scope. Plenty of the IME/expert work can be done without actually having to see the claimant.

 

[psyguru]

I get referrals for a wide variety of cases nationwide from FFD, med mal, PI, will contest, competency to stand trial, NGRI, capital mitigation, medical board cases, court-martials, TBI cases, fear of imminent death, immigration cases, etc.

 

[Candidate2017]

Most loopholes past that are just tax fraud that you found an accountant to sign off on. With how defunded the IRS is these days I guess this can be considered a positive EV risk but there's certainly some peace of mind to living life with integrity that I find hard to outvalue with $$.

An accountant balances the books but a tax lawyer will keep you within the realm of legal. A good one costs at least $500/hr.

If you want to push the envelope on a novel tax structure, your tax lawyer will conduct research and send a research memo to the IRS arguing why your proposed plan is legal, and request a "no action" letter. The IRS is obligated to render a decision on your proposed plan within 90 days or so. Your legal costs will easily hit $5000-$10,000+ but you will sleep easy.

There are a lot of neat tax structures you can use, especially if your spouse as part of your defined benefit pension plan, engage in sale-leaseback of your clinic, transfer art displayed in your clinic to your nonprofit, offshore asset protection, etc.

To OP, for some reason, I get the feeling people who have to ask "how to make money" questions are generally better off being employees.