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For those of your who have moonlighted ...

Discussion in 'General Residency Issues' started by mshheaddoc, Apr 13, 2007.

  1. mshheaddoc

    mshheaddoc Howdy Moderator Emeritus 15+ Year Member

    Apr 24, 2002
    Wild west of Mistytown
    I was wondering if you might be able to share your financial advice over on this thread. This is a great topic which alot of residents don't realize (unless they hire an accountant) on how to deal. If you have any advice or just want to share how you do it, it would be fantastic. I'd really appreciate it.

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  3. 3dtp

    3dtp Senior Member Physician 10+ Year Member

    Nov 27, 2005
    I have moonlighted. I prefer to work as an independent contractor over a salaried "employee." There are several reasons for this. First, any milage is deductable at the IRS rate of something like 44 cents/mile (check the IRS for the exact rate). 2. You can deduct professional expenses like the internet connection you use to check your patient load, imaging when you are called, or lab values you are concerned with, schedules and whatnot. Check with your tax advisor about this because you would have to divide the time you spend playing online games and non-related activities and only claim that portion of the expense related to work. 3. You can deduct professional dues/fees/journal subscriptions and amortize/expense textbooks if you are not reimbursed for these by your trainng program. All told, this adds up to a sizable deduction. 4. You have an additional measure of control over your availability which might help avoid excessive working hours.

    Downside: You have to pay a 15% (employees pay 7.5%) social security tax on independent contractor earnings over and above any expenses you and your tax accountant can't cover.

    In any case, take a very good and careful look at the med-mal arrangements. Pay very close attention to this and check with an attorney that you pay (deductable) to review this if there is any question at all in your mind. There are two types of med-mal insurance, cheap and expensive. These are "claims made" and "occurance based." Occurance based are very expensive relative to "claims made." The reason you want Occurance based is this:

    You work for hospital ED as a moonlighter for six months and end your arrangement June 30 to begin your dream job at another hospital. The estate of John Doe sues you for his burst appendix that you failed to diagnose that resulted in his untimely demise. You treated John in May, but the statute of limitations is a year and you get served in December while establishing yourself in practice. You call your prior "claims made" insurance agent and he says, sorry, the claim is made after your policy ended and so we won't cover you. You call your present insurance company and they say, that happened before you had a policy with us so we can't cover it.

    By now, you are thinking that perhaps Switzerland isn't a bad place to live.

    With an occurance based policy, the policy coverage is for any "event" that leads to a lawsuit while the policy was in place. In this case, the suit would be defended by your "moonlighting" policy and any claims paid will be paid by the insurance policy then in effect. Switzerland is the furtherest thing from your mind.

    Regardless of which form of moonlighting you decide to do, be mindful of the insurance, who pays and what protections you have. I'd also ask the question of who has the authority of authorize a settlement? If the insurance company doesn't need your permission, they may settle an otherwise frivolous case to save the cost of litigation.

    Also, make sure there are no clauses that prevent you from working where you want to when you complete the locums/moonlighting. Some hospitals will have a restraint of trade clause. This is prohibited from residency contracts but outside of residency, it is caveat emptor. In addition, pay some heed to the ACGME hours requirements. If you work well in excess of the 80/30 farce, and something goes wrong, you can be it will not work in your favor.

    My 2 cents.
  4. mshheaddoc

    mshheaddoc Howdy Moderator Emeritus 15+ Year Member

    Apr 24, 2002
    Wild west of Mistytown
    Fantastic advice on insurance and some great food for thought.

    What about others with experience? How many of you have formed corporations for moonlighting? S-corp? LLC? What about those who might be interested in moonlighting and might have more questions on how it all works?
  5. radonc

    radonc Senior Member 7+ Year Member

    Oct 17, 2002
    let the gov take the maximum amount of taxes up front (least number of deductions)...because the worst thing is having too little taken out, and then having to pay a huge amount in april...
  6. Bernardo_11

    Bernardo_11 I like Popeye's Chicken. Physician 10+ Year Member

    Feb 9, 2002
    Somewhere in the Pacific
    Another wonderful idea was to start and SEP IRA. BEcause you can put away 25% of your self employment earnings to this account, that's money that you get for the future that does not go to Unce Sam. After seeing more than 7 K going to the IRS, I decided to file for a 1040X and start an SEP IRA this weekend. But next year, I'll keep the SEP IRA in mind when I file from the get go.

    By the way, a WONDERFUL site which has a lot of accountants who work for doctors is here at it gave some wonderful advice and cued me in on starting an SEP IRA. You moonlighters should go check it out. MsHeadDoc, maybe you can ask the people on that site to come over here once in awhile to dispense some advice. I'm there they'll have much to gain from it as this can be a way for them to get some future clients. ;)


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