Thanks for the clarification.

I get that if your wife makes $125k, and you have the option of earning $500k as an employee or $350k as an independent contractor. Assuming you'll be able to come up with $25k to write off against your $350k of independent contractor income, I come up with your federal income taxes going up by about $65k, your social security taxes going up by $7k, and your Medicare taxes going up by $7k - for a total of $79k of additional taxes on the extra $150k of salary.

However, you will not be subject to the self-employment tax if you are paid as an employee, which will save you $22k in taxes that you would pay as part of your federal income tax return on $325k of self-employment income.

All in all, it looks like the cost to you if federal taxes, social security taxes, and Medicare taxes would be just about $57k on the extra $150k. The AMT does not seem to have much of an impact, but it would probably become less of a factor as your total income increases from $475k to $625k.

Zip Code: 01801

Thank you for your analysis. Definitely changes my thinking. I have been overestimating the tax advantages of being self-employed. Your scenario puts the $500k option at ~$90k better post-tax than the $350k scenario, which is significantly more than I assumed (I thought the difference would be closer to $50k: 50% marginal tax on $150k gross difference, then ~$25k of saved taxes via self-employed deductions).

Also very interesting that AMT has less of an effect as income goes up at the level.

I would like to find an excellent accountant who understands these issues (like yourself). I could start this year, even though I am not an attending physician yet. Also, I would like to know the advantage of having a local accountant (rather than the best accountant anywhere), especially relevant given that I will be moving in the next few years.

Thanks again for your help.