I received 6 months of income guarantee from the hospital in exchange for agreeing to stay and practice 2 1/2 years in the community. I did not get a 1099 for the money and when I called and spoke with the accountant she said it was not taxable. From reading a previous post, it seems as if I should get a 1099 for the 2 1/2 months in 2006 that go to repay this money. If they do not give me one, how do I figure out what to pay taxes on?

Zip Code: 75137

I think the question you are referring to is what happens if you get a signing bonus that is treated as a loan and then forgiven over time. When you get the money advanced to you, it's not taxable. When the loan is forgiven, that's when you pay taxes on it.

We've had a few clients over the years who got income guarantees from local hospitals, and from what I've seen, it seems to work in a similar way. As you receive the income guarantee, the money you receive isn't taxable. At the end of the income guarantee period, you figure out how much you owe to the hospital.

If the hospital then forgives the money paid to you through the income guarantee, that's when it becomes taxable to you. It works like this because if you don't work at the hospital for the agreed upon period, you're required to pay back the income guarantee. Since there are stings attached, the money doesn't become taxable to you until such time that the restrictions lapse.

I hope this helps clarify this situation. It's a complicated concept that you don't pay taxes when you receive the money, but at some future date upon fulfilling certain requirements.

Assuming the hospital routinely provides these income guarantees to attract physicians to practice in the area, you should feel comfortable that the hospital's accountant will provide you with accurate information that you can rely on. Even so, it's probably a good idea to have a CPA in your metropolitan help you out with throughout this process.

Zip Code: 01801