W-2 vs. 1099: What Every Young Doctor Should Know Before Signing a Contract
- Aug 21
- 2 min read
Your first contract as a doctor is a major milestone. Before you sign, it is essential to understand whether you will be classified as a W-2 employee or a 1099 independent contractor—and how that decision impacts your taxes and bookkeeping needs. At ISTAXPro, we provide bookkeeping and tax return preparation for doctors, ensuring your income is tracked accurately and your filings capture every eligible deduction from your first paycheck onward.
What W-2 Employment Means
As a W-2 employee, taxes are withheld automatically from your paycheck, including federal, state, Social Security, and Medicare taxes. Employers often provide benefits such as health insurance and retirement contributions, and you will receive a W-2 form at year-end for straightforward tax filing.
What 1099 Independent Contractor Status Means
As a 1099 contractor, you receive full pay without tax withholding and are responsible for paying your own federal and state income taxes, along with self-employment tax. While this adds responsibility, it allows you to deduct business-related expenses, including Continuing Education courses, malpractice insurance, professional memberships, uniforms, and travel related to your work.
Key Considerations for Young Doctors
● Cash flow management is crucial if you receive 1099 income, as you will need to set aside funds for taxes.
● Accurate record-keeping is essential to capture deductible expenses and manage your quarterly estimated tax payments.
● W-2 income offers simplicity, while 1099 income offers potential tax deductions if managed with clean bookkeeping and
compliant filings.
How ISTAXPro Supports You
We maintain organized bookkeeping to track your income and deductible expenses whether you are a W-2 employee, a 1099 contractor, or both. We prepare your tax returns accurately, ensuring deductions are applied correctly, and guide you through managing your estimated tax payments to avoid surprises at tax time.
Be Confident Before You Sign
Understanding the difference between W-2 and 1099 income will help you avoid unexpected tax bills and stress in your first year of practice. Let ISTAXPro keep your records clean and your tax filings accurate so you can focus on patient care while protecting your income.
Contact ISTAXPro today to ensure
you start your career on the
right financial track with
organized books and
compliant tax filings.
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