Every year around this time, I have the same conversation with at least one physician friend.
It usually starts with something like, “Peter, my CPA just told me how much I owe in taxes this year. I was shocked!”
Maybe you’ve had that same moment. You work hard, take extra calls, build side income, and then the tax bill hits. You look at the number and wonder how it’s even possible to send that much of your earnings away in one check.
The truth is, most physicians pay more in taxes than they need to. Not because they’re doing anything wrong, but because they’re not being strategic enough.
We’ve been trained to focus on earning more, not necessarily keeping more. But the most financially successful people I know—physicians or not—are incredibly intentional about taxes.
So as we head toward December 31, here are a few year-end tax moves to consider. None of this is meant to replace your CPA’s advice, but my hope is that it helps you think more proactively before the year closes out.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial, legal, or investment advice. Any investment involves risk, and you should consult your financial advisor, attorney, or CPA before making any investment decisions. Past performance is not indicative of future results. The author and associated entities disclaim any liability for loss incurred as a result of the use of this material or its content.
1. Prepay Next Year’s Business Expenses
A few years ago, I remember my CPA calling me in December and saying, “You’ve done pretty well this year. Want to save a few thousand in taxes?”
He told me to prepay a few business expenses—things I’d be paying anyway next year both in medicine and my businesses. I wrote a few checks before December 31, and that one phone call saved me thousands.
If you’re a 1099 physician or own a practice, you can often deduct prepaid business expenses like insurance, rent, marketing, or education this year instead of next. It’s one of the simplest ways to manage your taxable income.
2. Buy a Business Vehicle (If You Actually Need One)
I’ll never forget when a colleague told me he bought a big SUV “for the write-off.” When I asked what business purpose it served, he said, “Well, I drive to the hospital.”
That’s not quite how it works.
If you legitimately use a vehicle for business—say you drive to multiple practice sites, meetings, or properties—it could qualify for a deduction through Section 179 or bonus depreciation. Vehicles over 6,000 pounds, like certain SUVs, often qualify.
The key is it must be used at least 50% for business and placed in service before December 31. If it’s something you already need, this can be a smart move. If not, don’t force it. The IRS might take a closer look at it.
3. Upgrade Your Tech and Tools
Most of us rely heavily on technology for work, whether it’s managing our practice, investments, or a side business. If you’ve been thinking about upgrading your laptop, phone, or even video equipment, buying before year-end could allow you to deduct those costs this tax cycle.
For me, that’s looked like replacing my laptop that runs my business and podcast setup. If it’s used for business purposes, you can often deduct the full cost.
If there’s something for your practice that you’ve been thinking about purchasing or upgrading, might as well do it before the end of the year.
It’s amazing how many physicians miss this one simply because they wait until January to make the purchase.
4. Set Up an Accountable Plan
If you run your business through an S-Corp or LLC, one of the cleanest ways to maximize deductions is to set up an accountable plan.
It allows you to reimburse yourself for business-related expenses you pay personally—like your home office, internet, utilities, or mileage. The business gets the deduction, and you receive the reimbursement tax-free.
I know physicians who leave thousands on the table every year because they don’t have this in place. It’s an easy win and keeps your bookkeeping simple and compliant.
5. Use the Augusta Rule
The Augusta Rule is one of those IRS provisions that sounds too good to be true but isn’t. It lets you rent out your home to your business for up to 14 days per year, and that rental income is completely tax-free to you.
You can host a team retreat, content day, or strategy session at your home. The business deducts the expense, and you personally receive the income without paying a cent of tax on it.
A friend of mine who runs his own practice does this every December for his annual planning meeting. It’s 100% legitimate and a great way to shift income in a compliant way.
6. Consider a Donor-Advised Fund
For physicians who like to give charitably, a donor-advised fund (DAF) can be a smart way to combine generosity with tax planning.
You can donate cash or appreciated stock, get the full deduction now, and decide later which charities to support. Donating appreciated stock is especially powerful because you avoid capital gains taxes while still getting the deduction.
If you’re in a higher-income year, a DAF can help you reduce taxable income while setting aside funds for future giving. My family has done this, and it’s made giving more intentional and organized.
7. Defer Income and Accelerate Expenses
Timing matters. If next year’s income will be lower—maybe you’re cutting back shifts, taking time off, or transitioning to a new role—you can defer income until January and accelerate deductible expenses into this year.
For example, if you run your own practice, delay billing until January. Or if you’re 1099, wait to invoice until the new year. On the flip side, pay upcoming expenses now.
It’s not about gaming the system; it’s about managing your tax brackets strategically.
8. Pay Your Kids Through Your Business
This one’s both fun and educational. If your kids help in your business—maybe they appear in marketing photos, help with mailers, or organize digital files—you can pay them a reasonable wage.
The first $13,850 they earn (in 2025) is tax-free, and your business gets a deduction. Plus, it’s a great opportunity to teach them about work, saving, and investing. I know physicians who use this income to fund their kids’ Roth IRAs or 529 plans.
It’s a win-win for the family and the business.
9. Invest in Real Estate with Bonus Depreciation
This one is close to my heart because real estate has been one of the most powerful tools for me and many physicians I know to both grow wealth and reduce taxes.
Bonus depreciation allows you to deduct a large portion of a property’s depreciable value in the first year. For 2025, it’s 60%, which can significantly offset income.
If you qualify for real estate professional status (REPS) or actively manage certain types of properties, those “paper losses” can even offset active income. Even without REPS, you can often use them to reduce passive income from other investments.
This is one of the reasons real estate investing continues to be such a valuable part of my own financial strategy.
10. Explore the Short-Term Rental Loophole
Here’s one that’s growing in popularity among physicians. If you own or plan to buy a short-term rental property, you may be able to use the losses to offset active income if you materially participate.
That means being directly involved—handling bookings, managing cleanings, communicating with guests, or overseeing the property yourself, at least for the first year it’s in service. Many physicians will purchase the property near the end of the year, put it in service, self-manage and put in the necessary time, and in the following year turn it over the professional management.
When done right, this strategy can create substantial tax advantages. I’ve seen physicians use it to not only lower their tax bills but also build a lifestyle asset they can use with their families.
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A Quick Mindset Shift
Here’s something that completely changed the way I approach taxes.
Filing taxes is what we all do in April. Tax planning is what the wealthy do in the fourth quarter.
Most physicians are on defense—we hand our numbers to a CPA and hope for the best. But the physicians who get ahead financially play offense. They plan early, ask questions, and make moves before December 31.
You don’t need to know every tax rule. You just need to be proactive enough to ask your CPA, “What else can I do now before the year ends?”
Wrapping It Up
Every year, I see physicians overpay thousands of dollars because they’re too busy to think about taxes until it’s too late. And I get it—between medicine, family, and everything else, who wants to think about tax codes in December?
But small, intentional moves now can make a huge difference.
So before the clock strikes midnight on December 31, take an hour or two to meet with your CPA. Review your numbers, talk through these strategies, and make sure you’re not missing opportunities that could make a real impact.
You’ve worked incredibly hard for your income. Make sure it’s working just as hard for you.
Final Thoughts
Being tax-smart isn’t about avoiding taxes or finding loopholes. It’s about understanding the rules and using them wisely. The more intentional you are, the more freedom you create—to work less, spend more time with family, and focus on what truly matters.
Disclaimer
I’m not a CPA, attorney, or financial advisor. The information I’m sharing is for educational purposes only and shouldn’t be considered financial or tax advice. Everyone’s situation is unique, so please discuss these ideas with your CPA or qualified tax professional before making any decisions.
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Peter Kim, MD is the founder of Passive Income MD, the creator of Passive Real Estate Academy, and offers weekly education through his Monday podcast, the Passive Income MD Podcast. Join our community at the Passive Income Doc Facebook Group.
