One thing nobody has mentioned yet - with income at your level, you should also consider hiring a financial advisor alongside a CPA. I'm a neurosurgeon who tried the DIY approach for both taxes and investments my first two years and realized I was making costly mistakes in both areas. A good financial advisor who works specifically with physicians can help coordinate your overall financial strategy - student loan repayment approach (PSLF vs refinancing vs aggressive paydown), disability insurance (crucial for surgeons), retirement planning, tax-efficient investing, and eventual practice buy-in strategies if that's on your horizon.

Congratulations on finishing your fellowship! You're absolutely right to be thinking about this now rather than after your first year of 1099 income. I'm a tax attorney who works with physicians, and I'd strongly recommend getting professional help for at least your first year. At your income level ($750-850k), the potential tax savings from proper planning will far exceed the cost of hiring someone. Here's why: 1. **Entity Structure**: You'll likely benefit from an S-Corp election, which could save you $15-25k annually in self-employment taxes alone. But timing and setup matter - you want this done correctly from day one. 2. **Retirement Planning**: As 1099, you can contribute much more to retirement accounts than you could as W-2. With proper planning (Solo 401k, defined benefit plans, etc.), you could potentially shelter $100k+ annually while aggressively paying down your student loans. 3. **Quarterly Estimates**: These aren't just about avoiding penalties - strategic timing of income and expenses can optimize your overall tax situation. 4. **Business Deductions**: Medical practices have unique deduction opportunities that general tax software often misses. Look for a CPA who specifically works with physicians and understands medical practice finances. The investment (typically $3-5k annually) will pay for itself many times over. Once you're established and understand the complexities, you can always reassess whether to continue using professional help.

If I take home office deduction does anyone know if it increases audit risk? I've heard mixed things and not sure if it's worth the hassle if IRS is going to flag me.

The key thing to remember is that you have two options for claiming the home office deduction: the simplified method (up to $1,500 for 300 sq ft at $5/sq ft) or the actual expense method using Form 8829. If you choose the actual expense method with Form 8829, then yes - you cannot also deduct those same home expenses in Part 2 of Schedule C. However, there are some expenses that can still go in Part 2 even with a home office. For example, if you have a separate business phone line, office supplies, or business equipment that's not part of the home structure itself, those would still be deductible in Part 2. The rule is really about not double-counting the same expense. Given that your home office is 15% of your house, I'd strongly recommend calculating both methods to see which gives you a bigger deduction. The simplified method would give you up to $1,500 (if your office is 300+ sq ft), while the actual expense method might be much higher depending on your mortgage interest, property taxes, utilities, and other qualifying expenses.

Quick suggestion - have you considered forming an actual LLC for your rental property? When my sister and I owned a duplex together with a similar arrangement, our CPA recommended creating an LLC and filing as a partnership (Form 1065). This made the management fee situation much cleaner tax-wise. The LLC would pay my sister a management fee, issue her a 1099, and then we'd get K-1s for our ownership percentages of the remaining profits. Saved us a bunch of headaches and potential audit flags.

Based on what everyone's shared here, it sounds like you're on the right track with treating that 5% as a deductible management fee. I went through something similar with my rental condo and learned a few things the hard way. The key points I'd emphasize: 1) Get that arrangement in writing ASAP if you haven't already - doesn't need to be fancy, just clearly state what services your brother provides for the 5% fee. 2) Make sure you're both handling it correctly on your returns - you deduct it as a business expense, he reports it as self-employment income on Schedule C. 3) Keep detailed monthly records showing the calculation. One thing that caught me off guard was the 1099-NEC requirement mentioned by Ava - if that 5% adds up to more than $600 for the year, you technically need to issue him one. My accountant said this is often overlooked in family arrangements but it's still required. The LLC suggestion from Miguel is worth considering too, especially if you plan to buy more properties together. It does add some complexity but makes everything much cleaner from a tax and liability perspective.

Kinda late to this thread but something nobody has mentioned - if your spouse isn't actively involved in running the business and just lets you use their referral links, the IRS might see this as assignment of income which is a no-no. You can't just move income between people even if you're married. Make sure your spouse is actually doing something in the business if you're going to claim their 1099-MISC income as business income on either your Schedule C or theirs.

Great question! I'm dealing with something similar in my consulting business. Based on what I've learned from my accountant and research, you can definitely include those personal 1099-MISCs on your Schedule C if they're legitimately part of your business operations - which they clearly are since credit card referrals are a core part of your rewards business. The key is documentation. Keep records showing how all these income streams are interconnected parts of the same business activity. For your wife's 1099-MISCs, I'd be more cautious. The safest approach is probably having her file her own Schedule C for her portion, especially if she's actively participating in generating those referrals (not just passively letting you use her links). One thing to consider: even though separate Schedule Cs means you'll each pay SE tax on your respective portions, you'll both be building up Social Security credits and can each potentially contribute to your own SEP-IRAs based on your individual business income. Sometimes that actually works out better tax-wise than trying to consolidate everything under one person's return. Document everything well - the IRS likes to see clear business purpose and actual involvement when income appears under different names but gets reported as business income.

This thread has been incredibly helpful! I've been struggling with this exact issue for my tax preparation. I have three rental properties that I actively manage (tenant screening, minor repairs, property showings) and was completely confused about whether this "active" management meant I should use Schedule C. Based on the discussion here, it's clear that Schedule E is the right choice for my situation since I'm managing my own investments, not providing services to other property owners. The clarification about avoiding self-employment tax while still being able to deduct all legitimate expenses is huge - I had no idea I was potentially overpaying taxes by considering Schedule C. One follow-up question: I sometimes hire contractors for bigger repairs on my properties. Should I be issuing 1099s to contractors who do work on my Schedule E rental properties, or is that only required for Schedule C business activities? I paid my handyman about $3,200 last year and want to make sure I'm handling the reporting correctly. Also, @Emily Parker, your point about QBI deduction eligibility is something I hadn't considered at all. I'll definitely need to look into whether my rental income qualifies - that 20% deduction could be substantial on my rental profits.

This is exactly the kind of confusion I had when I first started with rental properties! The key distinction that helped me understand it was thinking about WHO you're providing services to. If you're managing your own rental properties (even very actively with repairs, tenant screening, marketing vacancies, etc.), you're managing your own investments - that's Schedule E. The income isn't subject to self-employment tax, and you can deduct all ordinary and necessary rental expenses. Schedule C would only come into play if you were providing property management services to OTHER people's properties as a business, or if you were a real estate dealer (buying/selling frequently rather than holding for rental income). One thing I learned the hard way - make sure you're tracking your expenses properly on Schedule E. You can deduct a lot more than you might think: advertising for tenants, legal fees, travel to properties, even a portion of your home office if you use it exclusively for managing your rentals. Just keep good records and receipts for everything. The material participation rules that you mentioned are more about passive activity loss limitations - they don't change whether you use Schedule C vs E. Even if you don't materially participate, rental income still goes on Schedule E (it just might be subject to different loss limitation rules).