I am a resident who did some moonlighting this past year. I was wondering if the charges that were billed, but not collected, could be deducted from the amount that was collected. Can that be considered charitable work?

Zip Code: 72205

As a physician, you are only taxed on the income you collect. So if someone doesn't pay you, you don't claim a Bad Debt. Instead, you just never report the amount due to you as income.

Some businesses do need to report their bad debts. A business on the "accrual basis" of accounting reports income when the product is shipped or when the service is provided. If they won't get paid, the only way to get the Accounts Receivable off their books is by claiming a Bad Debt.

Zip Code: 01801

so why don't physician's change over to the accrual basis --- i had to write off about 32k last year in bad debt...

Zip Code: 02891

Physicians don't generally want to elect to be on the accrual method of accounting. When you elect accrual accounting, you're taxed on the accounts receivable at the end of the year. Yes, you do get to write off your payables, but for most medical offices I've seen, the A/R is much higher than the A/P.

And if you think of it, you are allowed to write off your bad debts. When you're on the cash basis of accounting, you just pay taxes on the money you receive. So if someone doesn't pay you, you essentially wrote off that receivable by never picking it up as income.

Zip Code: 01801