Fam Pract Manag. 2001 Apr;8(4):13.
The Practice Pearl titled “Tax Time” [Monitor, February 2001, page 17] was in error. Tax payers cannot decrease their 2.9 percent Medicare tax by claiming the first $100,000 of their income as salary and any subsequent earnings as bonuses, as originally reported in the Nov. 15, 2000, Physician's Money Digest. All wages are subject to FICA (Medicare and Social Security) taxes.
However, self-employed physicians can decrease their tax burden by incorporating their practices (as S-corporations) so that they receive salaries. The corporation would then pay a “reasonable” salary. Physicians would be entitled to all remaining money earned by the corporation, which would be characterized as S-corporation distributions and would not be subject to FICA taxes.
WE WANT TO HEAR FROM YOU
Send your comments to email@example.com. Submission of a letter will be construed as granting AAFP permission to publish the letter in any of its publications in any form. We cannot respond to all letters we receive. Those chosen for publication will be edited for length and style.
Copyright © 2001 by the American Academy of Family Physicians.
This content is owned by the AAFP. A person viewing it online may make one printout of the material and may use that printout only for his or her personal, non-commercial reference. This material may not otherwise be downloaded, copied, printed, stored, transmitted or reproduced in any medium, whether now known or later invented, except as authorized in writing by the AAFP. Contact firstname.lastname@example.org for copyright questions and/or permission requests.
Want to use this article elsewhere? Get Permissions
More in FPM
Related Topic Searches
MOST RECENT ISSUE
Access the latest issue
of FPM journal
THE NEW E/M CODING RULES
Learn more with these articles from FPM journal: