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Private practice along with employment

I am in the final year of my training and I am looking at a couple of potential job opportunities. I plan to work basically a full workweek (with either one entity or 2 half-time positions at two entities). I plan to get medical/dental through the employed work.

My question revolves around my long term goal of having my own private practice. I am considering hitting the ground running with a private practice of my own, along with these jobs, when I graduate in June. The question is, what are the benefits come tax-time to have my own practice? I have an idea of the types of expenses I can write off ... It seems it would be better to have a practice in my own name just for the write-offs, even for one day a week, than to not have one at all .... Of note, one of the potential employers would allow me to submit expenses for work-related purchases (office supplies, computer, etc) and have the cost deducted from my income pre-tax - but that still, I think, leaves quite a few things that I couldn't save taxes on/write off without my own private practice.

I hope that's not too confusing ...

Thanks in advance - and thank you for this amazing resource!

Re: Private practice along with employment

Having a private practice gives you a lot of flexibility tax-wise.

First off, you can deduct your professional expenses that you were not able to write off through your job. Plus, you can write off a portion of your car, and you can also write off a portion of your home by claiming the office deduction.

When you're self-employed, you can set up your own retirement plan, and shield some of your income from taxes. Assuming you'll max out a 401k plan at your job, you'll set up a SEP IRA, and put away 20% of your net private practice income each year.

If you're married, and your spouse doesn't work or doesn't have access to a retirement plan at work, you can employ your spouse, set up either a SIMPLE IRA or a Solo 401k for your practice, and put away up to $16,500 into a pre-tax, tax-advantaged, creditor protected account - even if you are maxing our your salary deferrals through your job.

And if you have kids, you can employ your child, and save taxes on the money paid to your kid even though your kid won't owe a dime in taxes.

And even if you can't take advantage of any of these things, having a private practice will help increase your income this year, and help you reach your ultimate goal of having your own practice down the road.

I hope this helps you our.

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