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Joining a physician group (LLC) on a partnership tract and taxes

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  • Joining a physician group (LLC) on a partnership tract and taxes

    I am a physician fellow and trying to educate myself on these topics. I apologize for my low taxation/financial literacy and may not know enough right now to ask the correct questions, but I would like to start.

    In three months I will start a partnership tract job and make a salary as an employee of 250000. Since I am an employee, I assume I will be getting a W2, and I will file taxes as I have normally done during my training. Am I correct to say that there would essentially be no tax benefit to forming all LLC, filing as an S-Corp before I make partner?

    Once you are partner, the physician group is an LLC, but I have also noticed that some of the physician members are their own LLC within the group (which is why I started researching some of these topics).
    The last few years, the compensation for a partner has been 500000-600000 dollars. Would the prudent thing to do be to form an LLC for myself, file as an S-corp, take the partner distribution and give myself a reasonable salary of say 250000-300000 with the rest as a distribution to lessen FICA, Self-employment or Social Security and Medicare taxes?

    I am also now reading about the 199a deduction, and wondering if I would be able to utilize that break at some point.

  • #2
    1. Respectfully, you are on a partnership track rather than tract.
    2. You are correct, you do not need to form an s-corp or LLC until you have a need to. The need is not there as an employee.
      • You don’t need to make any further decisions about how to handle partnership status from a tax viewpoint until you have found an experienced (in this area) CPA who will analyze the comprehensive situation and discuss and advise you pro’s and con’s
    3. Possibly you will be able to utilize a scaled-down 199a deduction if you are MFJ and a spouse who d/n work, depending upon your other income and the deductions impacting your taxable income.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Thank you for your response!

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      • #4
        You're welcome and welcome to the forum!
        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          Originally posted by tm9 View Post
          I am a physician fellow and trying to educate myself on these topics. I apologize for my low taxation/financial literacy and may not know enough right now to ask the correct questions, but I would like to start.

          In three months I will start a partnership tract job and make a salary as an employee of 250000. Since I am an employee, I assume I will be getting a W2, and I will file taxes as I have normally done during my training. Am I correct to say that there would essentially be no tax benefit to forming all LLC, filing as an S-Corp before I make partner?

          Once you are partner, the physician group is an LLC, but I have also noticed that some of the physician members are their own LLC within the group (which is why I started researching some of these topics).
          The last few years, the compensation for a partner has been 500000-600000 dollars. Would the prudent thing to do be to form an LLC for myself, file as an S-corp, take the partner distribution and give myself a reasonable salary of say 250000-300000 with the rest as a distribution to lessen FICA, Self-employment or Social Security and Medicare taxes?

          I am also now reading about the 199a deduction, and wondering if I would be able to utilize that break at some point.
          Don’t need to do anything now. How many years to partner?

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          • #6
            Two years to partner.

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