Tax implications of the locum tenens lifestyle: an interview with Logan Foltz, MD, EA

Many thanks to Logan Foltz, MD, EA, for joining me on today’s episode of “The Art of Medicine with Dr. Andrew Wilner.” Logan has a unique professional story. After completing his psychiatry residency, he initially worked as an inpatient psychiatrist. 

Logan discovered how few tools psychiatrists possessed to turn their patients’ lives around. He also found his work schedule as physically grueling as it was emotionally unrewarding. He concluded he needed better work/life balance.

While preparing his own tax return, Logan became fascinated with the internal revenue service tax code. Using locum tenens as a bridge, Logan gradually transitioned to become a full-time tax specialist. The tangible reality of numbers appealed to him, and the complexity of the tax code challenged his intellect. 

Logan loved helping his fellow physicians move towards their goals of financial independence. To qualify as a tax professional, he passed the examinations required to earn his “Enrolled Agent” (EA) designation, the IRS’s highest credential.

Please join us for this fascinating 30-minute conversation as Logan shares his insights into the tax implications of the locum tenens lifestyle. If you are practicing locums and need to know the difference between a W2 and a 1099, Logan can help. 

You can reach Logan Foltz, MD, EA, at his website: www.tasxmartmd.com

For more programs on taxes, see the following episodes:

 #03 Ben Nanney, CPA

https://www.youtube.com/watch?v=jUh77B6LrEw

 #06 Johanna Fox, CPA

https://www.youtube.com/watch?v=dUAab_Uz-NY

 #74 Ben Nanney and Jarin Dana

https://www.youtube.com/watch?v=S5NYbGfP92k

 #IRS #taxes #locumtenens #enrolled agent #CPA #loopholes

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Transcript

[Andrew Wilner, MD]

Welcome to the Art of Medicine, the program that explores the arts, business, and clinical aspects of the practice of medicine. I'm your host, Dr. Andrew Wilner. I've planned a great program for today, but first, a word from our sponsor, locumstory.com.

Locumstory.com is a free, unbiased educational resource about locum tenens. It's not an agency. LocumStory answers your questions on their website, podcast, webinars, videos, and they even have a Locum's 101 crash course.

Learn about locums and get insights from real life physicians, PAs, and NPs at locumstory.com. Today, I would like to welcome tax specialist, investor, and locum tenens doc, Dr. Logan Foltz. That's right.

Logan was a locum tenens physician who became a tax professional, specializing in helping fellow physicians improve their financial lives. Let's hear what Logan has to say. Welcome, Dr. Logan Foltz.

[Logan Foltz, MD, EA]

Hi, good morning, Andrew. Thanks for having me on.

[Andrew Wilner, MD]

Yeah, you know, your background's a little bit different, and I love people that have different backgrounds. So tell us about it.

[Logan Foltz, MD, EA]

Yeah, well, I always, always wanted to be unique, but yeah, my story is that I finished my residency training in psychiatry just over 10 years ago. And honestly, from the very beginning, I was always thinking of medicine as, as, as a way to get to the destination, the next step for me. And I was always very mindful of financial freedom, financial independence, just living life on my own terms.

And that I was able to make that happen much sooner than I thought through a combination of just good, good luck and just, and just good financial habits. And, and about five years ago, I can't believe it's been five years during the pandemic is when locums was kind of part of that journey. I realized I wanted to work less, I wanted to just, I enjoyed my free time more, and I want to take advantage of it.

And that's how I got into locums, and started just started taking assignments lasting a few months at a time or so. Eventually, I decided that I would thrive more in a different field altogether. And I enjoyed helping doctors more than I like the day to day of seeing patients in the hospital, which is how I which is how I got from 2020.

To now it's been it's been a long journey, but it's been, it's been very intellectually stimulating and rewarding. And I'm and I really enjoy what I do right now. I became a tax advisor after studying financial planning, and I realized that the scope of taxes was much broader than I thought, and probably one of if not the most important pillars of financial planning and, you know, and, and, and, and overall, helping people, helping people along their journeys to, to, to make their make their dreams come true.

And so I just decided to specialize in that at this point. And I now have my own, I now have my own practice. I work with primarily doctors helping them with helping them with their taxes.

[Andrew Wilner, MD]

Well, taxes are not a traditional subspecialty of medicine. But I see you found your way there. Before we go further, tell me psychiatry, you were able to practice psychiatry as a locum tenens physician.

Is that correct?

[Logan Foltz, MD, EA]

Yeah, that's right. That's right. I worked in a few different states.

And I've always practiced inpatient psychiatry. So around 2020, around around 2020, I started, you know, working with, with different hospitals and, you know, provided, you know, and, and traveled there a couple times a month to provide inpatient services.

[Andrew Wilner, MD]

Interesting. Now, as a professional tax advisor, now, are you still doing some locum tenens? Or all of that is behind you?

[Logan Foltz, MD, EA]

No, I'm not. I stopped medicine completely earlier this year, I was working remotely with my prior hospital system. But what happened was around three years ago, I realized that it has to be a full time commitment, you can't have one, a foot in one profession, especially if it has, especially if, you know, if there's, if there's a culture of competence of excellence, and also with my own high standards, I realized that I needed to eventually move out of medicine and commit completely to something else rather than, you know, rather than trying to run trying to wear two hats at the same time. So it wasn't sudden, but gradually, I just I just, I just transitioned to taking to practicing telemedicine here and there.

And as of now, I think that I think that I'm stable enough in my new career that I don't practice medicine. I was doing on site locum tenens for about a year before I got more in before I got more serious about this transition, which I embarked upon during the pandemic, when of course, we had a lot of time to just to just reevaluate our lives altogether.

[Andrew Wilner, MD]

It's very interesting. So you used locum tenens as a bridge to this new career?

[Logan Foltz, MD, EA]

Yeah, that's exactly right. And, and as I think I alluded to my, my primary motivation for locum tenens was I wanted to work less, I wanted to have more time off. And there wasn't a part time option at my hospital where I worked for five years out of training.

And so that I thought was that I thought was the solution to, to my dissatisfaction with my medical career, and, and feeling like I worked more than my, than I worked more than I needed to, my income was more than I needed. And so I thought it was best to scale back. And that that was my intention was to do it indefinitely doing locums definitely, but, but it dawned on me over time that I wanted to do something where I enjoy the day to day more.

And I didn't want to retire completely as, as I entertained also. And so that was that was kind of the bridge to, to deciding what to do next, deciding what would be, you know, more of a more of a full time longer term journey.

[Andrew Wilner, MD]

Well, a couple things. First, I respect your observation that medicine is really to do it properly, it's all consuming. And as much as it might be fun to do this and do that and have real estate as a hobby, you know, I'm always a little suspect of physicians who spend 50% of their time doing non clinical work.

Because, you know, it's kind of like being a pro athlete, you know, your standards are very, very high, you know, none of none of the NFL players are doing real estate, you know, on the side when they're not playing games, you know, on the weekends, it requires, you know, full dedication. And, and I think that that's one of the difficult things about really any profession that to perform at the highest level, which, you know, you're, you feel obligated to do, and we all do, it's not easy to have a sidelight. And I think that needs to be emphasized.

I think hobbies are certainly okay. But you have to be careful about trying to have two professions, there probably are some people who have, you know, limitless energy and limitless capacity that they can do two things at the same time, but it's certainly not easy.

[Logan Foltz, MD, EA]

Yeah, I, I would co sign everything you just said, I think that there is some variability in, in what some people define as the best work life balance, I determined, you know, before the pandemic, even that I wanted to be a part time worker, and, you know, work hard, play hard. And, and so there wasn't really room to be do the do part time medicine, and I mean, you know, very minimal part time, and still be and still keep and still keep my skills up to par still feel like I was, I was, I was on my game as much as my colleagues, and pursue other intellectual interests. I think that I know, I know, some, you know, physician entrepreneurs who successfully balance both, and I don't know how they do it with their family obligations.

And they still have, they still have a lot of hobbies they indulge in. But, but, yeah, but I like, you know, I like to relax, I like to travel, I like to, I like to, you know, I like adventure like everyone else. And for me, it, I thought one job was plenty, you know, and I just decided, I just decided at one point that I just want to commit to, I just want to commit to one thing.

And it's, and I think that, I think this is a better fit than medicine for me.

[Andrew Wilner, MD]

Well, we're gonna make a poster, a bumper sticker, one job is, well, you're preaching to the, to the choir, for sure. I practiced locums for a long time and was able to do many other things. Now, let's get back to taxes.

I mean, you don't wake up one morning and say, aha, I'm going to be a tax specialist. Do you, did you, do you have some kind of initials after your name now? Did you have to go study somewhere?

How does that work?

[Logan Foltz, MD, EA]

Yeah, good question. So how I became a tax specialist was I started as kind of a stem cell, just wanting to be like a financial coach, financial helper kind of person. And I studied for something called the CFP Certified Financial Planner, which most of your listeners have probably heard of.

[Andrew Wilner, MD]

CFP, yes, I've had CFPs on this program.

[Logan Foltz, MD, EA]

And there are a lot of rigorous requirements for that, you know, courses, exams, experience. And I decided that part of my experience would be with, you know, with getting, getting more proficient with taxes. And my motivation at the time was to be a locum tenens financial advisor, actually.

And I thought, what is people's, what are locum tenens doctors' most acute pain point? And for most of them, it's taxes. And that would just be a way to provide better service to, you know, to advise clients more competently on a very important area of locum tenens medicine.

And that's how I ended up getting more tax experience. And, and taxes are just, are so much more vast than I realized. Even, even when I was studying for the CFP, even when I was a doctor doing my own taxes, practicing in multiple states, there is a lot of breadth.

And I like to go deep and, and, you know, and provide comprehensive service. And, but, but along the way, I did end up getting the enrolled agent designation, which is, which is something that the IRS recognizes as, as, as their highest designation that allows the practitioners to provide practice in front of the IRS to represent taxpayers. But there's also a lot of, there's also three examinations in which you are, you are asked to demonstrate that you understand the most important tax concepts that your, that your clients will face.

[Andrew Wilner, MD]

So you can legally prepare a tax return?

[Logan Foltz, MD, EA]

Correct. Yes. So what I do now is I provide tax preparation, but really I focus my practice, I think the heart and soul is tax planning.

And I can provide representation, but I do, I prepare taxes so that I can know my clients better. And so I can provide better planning for them so they can lower their taxes in current and future years.

[Andrew Wilner, MD]

Let's talk, since you were a locum tenens physician and had personal dealings with taxes as a 1099 self-employed individual, and we have a lot of locum tenens docs in the audience. So what's special about locum tenens doctors and taxes?

[Logan Foltz, MD, EA]

Yeah, that's a great question. So most fundamentally, you are treated as a different kind of worker by the IRS and Department of Labor. You're considered an independent contractor, you're self-employed.

And there's different, there's different ways to describe this. And two of them, I just mentioned, you're independent contractor, you're self-employed. And you'll often just see, often just see these folks referred to as 1099.

Those are all describing the same kind of worker. If you're employed, you're considered a W-2 worker. So you'll see the dichotomy of W-2 and employed, or 1099, self-employed, independent contractor.

So the good news is you're your own boss, and no one else is controlling how you work, what you do, at least not enough to say that you're employed, you're your own boss, even though you you do work for other other practices or hospitals. What that the good news is that you have a lot more control over your income, your deductions, how much you work, and several other aspects of your practice. The downside is you do have to provide more of the, you have to provide more of what you may be used to your employer doing for you.

For instance, your employer pays half of your payroll taxes. But if you're self-employed, or if you're a locum tenens doctor, and you're 1099, you have to pay a lot more taxes in the form of Social Security and Medicare tax.

[Andrew Wilner, MD]

Like Social Security. I think you're the expert, but on my W-2 now, I pay a Social Security tax, and my employer matches it, right? Absolutely.

[Logan Foltz, MD, EA]

Yeah. Yeah. So in your W-2, what you'll see is the amount of Social Security tax that gets withheld from your pay.

And that's about 6% of your pay up to a certain limit. Your employer also pays 6%. But you actually don't even see that in the W-2.

So when you when you're a W-2 employee, not only do you see, you don't only do you not see with each pay period, how much you're paying in Social Security, unless you're looking at your pay stub, your withholders, your employers withholding it for you, but you don't really see or, or feel, you know, the Social Security being taken out of your employer's pocket that they're paying for you. So that's a big difference when you're when you're a local tenens doctor in your 1099, you have to either write either pay the IRS directly through their, their site IRS, using your IRS account, or you have to just, or you have to pay them some other way. So the money comes directly out of your out of your savings, and you and you're much more aware of it, then the amounts are much higher than you would pay as W-2 employee.

[Andrew Wilner, MD]

Well, because now, you are also the employer. So as the employee, you're paying 6%. And as the employer, you're paying 6%.

So now you're paying, you have the privilege of paying 12% in Social Security.

[Logan Foltz, MD, EA]

Yeah, that's right. And on top of that, you're paying Medicare taxes, too, which are much lower, but taxed on a higher on all of your earned income. So the Medicare tax is 2.9%. And unlike Social Security, there's no cap on that. If you make $800,000, you'll pay 2.9% on all $800,000 that you bring in.

[Andrew Wilner, MD]

So we're already up to 12%, plus 2.9%. And this has nothing to do with state taxes or federal taxes.

[Logan Foltz, MD, EA]

Yes. And that is the other. That's the other.

One of the other major differences is that you is that you're not having your taxes withheld for you by your employer. You might get a pay stub from your locums agency or from the hospital, but it won't show that they're paying any that they're withholding anything and paying your taxes for you. Or so you have to you have to be aware of how much to pay.

And you have to be responsible for paying those not only when you prepare your tax return, but on a quarterly basis with the IRS. And so that's, that's, that's very important to do throughout the year. And I have seen some doctors who, who don't even know that they're not having their tax withheld.

And then they see they have a big tax bigger tax bill. Yeah, that's that's that's, that's a, that's, that's more common than you would probably think. And the state estimated tax requirements, sorry, the estimated tax requirements apply to the IRS and also at the state level.

So they can get to be they can get they can get to be a lot to manage, especially if you work in more than one state.

[Andrew Wilner, MD]

Ah, so I was just going to ask you now many locum tenens, physicians, including myself, I worked in several states. And then the issue came up, do I have to because I worked in that state, do I have to file a tax return in every state that I worked?

[Logan Foltz, MD, EA]

And the answer to that question is yes, if you are on site in those states, every state is going to consider that income, that's that they that they have the privilege to tax. And so and so you do need to have some awareness of that tax liability. It's possible that the amount of income you make is so low that you might be able to get away with not paying estimated taxes.

But in many, you know, but if you're if you're earning significant income in more than one state, then each state is is going to consider that what's called source income in their state. And where it gets more complicated and where a tax professional can can clarify for you is how how your home state will tax income you earn elsewhere. And most commonly, they will, they will give you a tax credit for taxes you paid to another state.

And so you won't pay double tax. But sometimes the rules, there's some nuances in how states handle handle that sort of situation. So if you are working, as I did inpatient on site, and in more than one state, yes, you're going to pay taxes, just like you know, just like your favorite NFL player will pay taxes when when they travel from, you know, when they when they travel when they travel from New York to Los Angeles or anyone else.

And it's even it's more complicated and potentially messier if you're remote, which is probably probably a little bit too complex to try to explain. But it's important to know just how states treat how states decide what income to tax and what not to tax.

[Andrew Wilner, MD]

Right. So I'm here in Memphis, Tennessee, let's say I'm doing some remote locums consultation, reading EEGs or something that are generated in Alaska. You know, when they don't have a neurologist, what would I have to pay taxes in Alaska?

[Logan Foltz, MD, EA]

Well, if Alaska had an income tax, you may, but Alaska is a no income tax.

[Andrew Wilner, MD]

Bad example. Bad.

[Logan Foltz, MD, EA]

Yeah. Okay. Yeah.

A better example would be California. I'm pretty familiar with California because that's where I have the most clients. And so each state has their own rules for how they tax remote income.

And there's a threshold you may need to exceed in order to in order for that state to say that you have a business presence and you're doing business in that state. And for California, there's three different criteria. And I think I don't take this as gospel.

But I think the one that is most applicable is if you if your business has 25% or more of the income from California, then they they they will you've met the threshold to have to pay California taxes if you're remote. And so this is not formal tax advice. You know, you need a tax advisor to to get specific advice.

But that what you would want your tax advisor to and to to find out for you is how does how what do states consider to be source income if you're if you're not in the in the presence of the state if you're not working in a state and how much income do you need to earn through that state to to have to pay taxes that state and different states define source income differently. You know, most states are kind of like California where if the you know, if the if the services happen in the state where that that lead to income, then they will consider that to be taxable income that they that they have the right to tax.

[Andrew Wilner, MD]

Okay, we have established, I think beyond the shadow of a doubt that you if you are a locum tenens physician, that you need an accountant.

[Logan Foltz, MD, EA]

I would, I would, I would concur completely, especially if you're new at this. I thought you would.

[Andrew Wilner, MD]

And, you know, preferably, preferably someone like yourself, who specializes in not only physicians, but locum tenens physicians. And I've had a few others. There aren't too many, but I've had at least one and I think maybe two on this program, whose entire practice is focused on locum tenens physicians, because as you can see, they have a much different scenario than, say, a guy who's an academic physician, you know, employed gets one check from one state, you know, there's automatic withdrawals for all these things.

And it's a lot more straightforward. We didn't talk, let's talk about one of the positives that I think is really important to highlight. And, and that is as an employer with your own business, being you, right, your own business, there's potential to save money on expenses, right?

Business expenses. Could you say a little bit about that?

[Logan Foltz, MD, EA]

Sure. So for comparison, as if your listeners are employees, they know that they know that most of most of the expenses that they that they have as a, as a doctor are not deductible, they can get some reimbursed, you know, you can get your CME reimbursed, you can get confidence reimbursed, but that's really at the discretion of the employer, you know, what they are willing to reimburse. If you are a locum tenens doctor, and you're self employed, you're the employer, then you can deduct anything that the IRS considers an ordinary necessary business expense.

So and so that will lower your income, and that will lower your tax liability. And so there is, there's a wide range of things that you can deduct if in most most of the time fit intuitively seems like you should be able to deduct it, you can obviously education would would fall would would qualify, travel would qualify if you're traveling to a conference, or if you're paying your own expenses to work, work out, you know, work away from home, then you can you can deduct those two, you can deduct the cost you pay for professional services, whether that's a lawyer, whether that someone review your contracts, whether it's an accountant, you know, if those are those, those would have a business purpose to. And so, and so you can, and so most most doctors will be able to deduct a lot more if they are self employed than they would as an employee. And one thing that I want to make sure I mentioned is that you can potentially deduct a higher amount of retirement contributions.

And so if, if you are a good saver, and you want to save more in your retirement accounts than you can, at your 401k at your hospital, or your 403b, there are ways to do that. If you're self employed, you decide what kind of retirement plan you want to set up.

[Andrew Wilner, MD]

Yeah, and that that is very important. And you do have a lot more latitude with that. And by even though it's well, it's lowering your income, which doesn't sound like a good thing.

But that means you're paying less taxes because your income is lower. But it's a good thing because by lowering it, you're taking that money, and you're putting those pre tax dollars into some savings plan 401k, or something like that, that's up to you. So all of a sudden, you have a lot of discretion, which also means you need to be informed.

So you know what your options are, and you know how to do it correctly.

[Logan Foltz, MD, EA]

Yeah. And just to elaborate on that a little bit, just I can compare my own situation to what I you know, what I did as an employee and what I did as when I was a locum tentens doctor. Yeah.

So when I was an employee, I was able to contribute the limits have gone up, let's say $20,000 a year to my 401k and 403b. And my hospital would contribute 4% of every of all of my income to the 401k and 403b. They had both of them that work together, but but we don't need to go into those details.

When I was locum tentens doctor, I could contribute up to there's the the maximum you can contribute when you're self employed is about 20% of your income, not exactly but approximately 20% of your income minus your expenses. So that for me was a much higher contribution than just 4% of my income, obviously. So you would probably want to have someone help you do that calculation if you're, if you're if you're self employed, and you want to contribute the maximum, because there are some easy ways to make mistakes with over contributing to retirement accounts, but the contribution limit is much higher than you will probably be able to contribute if you're w two.

[Andrew Wilner, MD]

Now, while we're talking dollars, so suppose I want to hire a tax professional to help me with this as a locum tentens physician. Now, I think I've gone through three different tax professionals personally in the last six years, but maybe that's just me. But I noticed that there's a range from about $1,000 a year to more than $10,000 a year.

That was sort of suggested to me by these various professionals. Can you tell me what's going on there? What's the difference?

[Logan Foltz, MD, EA]

Yeah, yeah. And, and, and, as a business owner tax professional, I have a hard time deciding how to set my prices. But I would tell you as the taxpayer, and the potential client, you know, for some for, for an accountant, that it's helpful to back up and ask just, you know, what is their pricing structure?

And what do they include as part of their service? So most accountants will charge a flat fee for tax preparation. But, and so that that's that has kind of transactional, transactional feeling to it.

And that's, that's, that's, that's what works well for most people in the industry. Mine's a little different. I can elaborate on that if you'd like, but most most will charge a flat fee.

But the question I would ask before you decide if it's a good value is, are you getting any planning? Or is there any, is there any forward looking recommendations that can be that can be included as part of part of the part of the price you're paying? Is there anything that is, is the person that you're working with?

Are they going to be available for you after taxes and answer questions? Do they offer planning meetings? Do they, will they help you if, if you get audited, or if you get a notice from the IRS saying that there's something you're sort of something that doesn't match our records?

We need you to, we need you to pay this amount. Will they help you with that? And if so, will they, is that part of the, is that part of your upfront fee?

Or do you have to pay extra for that? So that, so there's some, there's a lot of variability in the answers to those questions from practitioner to practitioner. As you might imagine, I charge a monthly fee and I try to be, I try to provide what, what I think, what I think doctors need, and they, most, most of my clients need, need help with all of these things, especially planning.

And so that's why I charge a monthly fee. If, but to answer your question, if you are just paying for tax preparation, of course, the answer is, it depends on what you're, what's in your tax return. And I can give you a kind of a simple scenario of just, just as a, just as a kind of baseline, which you might compare to yours and what other, what your, what an accountant might charge.

But if you are, you know, if, if you're filing single or married filing jointly, if you, if you, if almost all of your income is from locum tendens and the other items are very simple, like interest or simple investments. And let's say you have a couple of states, your home state and a state where you, where you journey to practice. I would, I'm just guessing I don't have, I don't have hard data, but I would, I think from what I've seen, the average price might be $800 to $1,000 just to do the tax return.

And keep in mind this, your fees might be lowered over time as, as the accountant gets more familiar with you and they have records of you in their system and they can, and they can just automate some of the preparation from year to year. That's what I would expect. There are, there are, I can name five or 10 things that would drive a cost up, which would make your return more complex, especially if you have a business entity that needs its own tax return.

And that would be most, that would be most commonly an S corporation for some self-employed physicians. But for a simple thing like that, I think you can probably find good service for under $1,000, but it's also important to look early, not don't look in March or April and expect to find someone who's available and who's going to give you a good value.

[Andrew Wilner, MD]

All right. Here, one other thing you could weigh in on. When I practiced locums, I did not set up a company.

My accountant said, oh, you don't need to do that. You're just Andrew Wilner, MD. That's good enough.

Don't worry about it. But I've read other, other recommendations are you should have an LLC. You should have an S corp.

Do you have a 25 words or less comment on that?

[Logan Foltz, MD, EA]

Well, I'll take up two of them and say it depends. But, but I think, I think, I think if you're practicing this on the side, if it's a side hustle and there's not much income, then from a tax perspective, I would say not really. You may benefit for limiting your liability by setting up an LLC, which stands for Limited Liability Corporation.

That's, that's more of a legal question. And I don't want to weigh in too much on that. What I do know is that malpractice isn't protected, but an LLC can protect you from other claims, such as, you know, such as a contract dispute or something like that.

So, so some people will, especially attorneys will recommend that, you know, I'm not very dogmatic on that. You, where you're more likely to benefit from setting up a business entity is if you have a much higher income from, from your, from your self-employment work. And certain, sometimes entities, such as an S corporation can help you reduce your Social Security and Medicare taxes.

But that's where I think if you talk to five different accountants, you'll get five different answers, because it does depend on the assumptions that go into the, that go into the decision. You know, how much you pay yourself in salary being the primary one, but also just where you work. You know, the, the rules for how states tax business entities can vary widely too.

Some states will have a special tax. Tennessee is a, Tennessee is one you might know. They tax, they tax S corporations.

They have their own special tax for that. So, so it does depend, but in general, if your income gets to be, you know, gets to be over a hundred thousand dollars gross, then, then, then, then I think it's a question worth asking. And also yeah.

And also if you're, if you're, if you expect to be in that business for a long time, then you may benefit more in the longterm by making that change. I know that was more than 25 words, but I'll stop there.

[Andrew Wilner, MD]

No, this is great. This is great. We are getting towards the end of our interview.

One key question I wanted to ask though, before we wrap up is, is there a single or a couple common tax mistakes that you find that physicians in particular make that they could potentially avoid?

[Logan Foltz, MD, EA]

Yeah, I can think of a few, a couple of them I've alluded to. One is being not, not being aware of estimated payment requirements and not making those payments and owing a lot of money in April. So that is, that is the pitfall you would definitely want to avoid.

[Andrew Wilner, MD]

I'm just going to interject and say, that's a real thing. And not only do you get a big bill, but you'll get penalties because I had to pay one, you'll get penalties for not paying along the way. So that is something to avoid.

[Logan Foltz, MD, EA]

Yeah. And keep in mind that if you're a low-competence doctor, the bill on your, on your tax return is going to be much higher than it was as a W-2 because of the, because of the Social Security and Medicare taxes that go on to your tax return, which you don't, which you don't see on your 1040, your tax return when you're employed. So the penalties are based on a larger number.

So it can be a real problem if you, if you don't make any payments at all, or if you grossly underestimate them. So if there's one pitfall I would say to avoid, it's that. Other ones that I think are, are simple but important are, are keeping your business income and expenses separate from your personal expenses.

So it's, I think for most people, it's worth getting a business bank account, a business credit card, mainly to limit your liability, but also to simplify your tax, your tax planning and preparation so that it's, it's easy to categorize and summarize your income and expenses. I think that's pretty important. And the other thing I would say is, is just in general, not being aware of deductions that are available or not keeping track of them, just not having, just not being organized.

And if you're not organized by nature, I understand. I don't, I don't judge people like that, but that's just, that's just an indication that that's worth getting help.

[Andrew Wilner, MD]

All right, Logan, this has been terrific. Is there anything you'd like to add before we close?

[Logan Foltz, MD, EA]

Sure. Yeah. I would just say in general, taxes and making money and, and, and, and becoming, you know, financially more secure important, but, but focus on, focus on your professional journey first.

Don't, we say don't let the tax tail wag the dog, but, you know, if you want to work in California because you were like the hospital there and you pay, you pay 10% more taxes, then that's okay. You know, I think that your longevity is important and you can still reach your financial goals. The other take home point I would, and I have, I have some perspective on this as a professional is if you can make your financial and professional life less complicated, then you'll, you, you will probably be glad you did.

So what I think of in particular is if you can not practice in 10 different states in one year, you will, you will thank yourself. And of course your seat, your accountant will thank you too. As you know, from, from locum tendens, it's, it's a major hassle just from credentialing to work in many different states and hospital systems.

And if you can find a good longterm fit where there's less change and less turnover, I think it will be worth your while. And so that, that, I think, I think those are just other things I would add just to the, just to the nitty gritty of the taxes.

[Andrew Wilner, MD]

Yeah, those are, those are great points. And for those of you who are doing locum tendens or considering it, a lot of these topics are discussed in my book, the locum life, a physician's guide to locum tendens. Logan, you told me you read it.

What did you think?

[Logan Foltz, MD, EA]

I thought it was really informative. I mean, it's, it's, it's a, I wish I'd read it before I went to locum tendens. It's a good overview and it's pretty even handed about the positives of working locum tendens, which we've talked about, but, but yeah, also just the, also just the, you know, the complexity and the, and the, and the, and the, and the, and the more time it takes to be, you know, to be, to, to manage assignments, to work in different systems and to get comfortable working and credentialed in many different systems too.

So I appreciate that. I think it is a good read if you, if you're like me and like books and just thinking about becoming a locum tendens physician.

[Andrew Wilner, MD]

All right. So how can people get in touch with you if they need a tax professional?

[Logan Foltz, MD, EA]

Yeah, I'm, I'm happy to, I'm still taking clients for the upcoming tax season. My tax firm is called TaxSmartMD and the website is pretty simple, www.taxsmartmd.com. You can also look me up on LinkedIn.

I think I'll be the first person that, that comes up with my name and my email is loganataxsmartmd.com. I'm happy to, happy to, happy to talk to any doctors that would like help.

[Andrew Wilner, MD]

Well, that's great. Well, Logan Foltz, thanks for joining me on the art of medicine. Yeah.

Thanks, Andrew. It was fun. And now a final thanks to our sponsor, locumstory.com.

Locumstory.com is a free, unbiased educational resource about locum tendens. It's not an agency. LocumStory exists to answer your questions about the how-tos of locums on their website, podcast, webinars, and videos.

They even have a locums 101 crash course. At locumstory.com, you can discover if locum tendens make sense for you and your career goals. What makes locumstory.com unique is that it's a peer-to-peer platform with real physicians sharing their experiences and stories, both the good and bad, about working locum tendens. Hence the name, LocumStory. LocumStory.com is a self-service tool that you can explore at your own pace with no pressure or obligation. It's completely free.

Thanks again to LocumStory.com for sponsoring this episode of The Art of Medicine. I'm Dr. Andrew Wilner. See you next time.

This program is hosted, edited, and produced by Andrew Wilner, MD, FACP, FAAN. Guests receive no financial compensation for their appearance on The Art of Medicine. Andrew Wilner, MD, is a professor of neurology at the University of Tennessee Health Science Center in Memphis, Tennessee.

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