I assume your hospital does not pay for your medical license. If that assumption is correct, it is deductible as an employee expense on schedule A even if you did not have any part of your income as an independent contractor. If you subscribe to NEJM or other journals those can also go on Schedule A. Schedule C or C-EZ for independent contractor income is the correct form. To proportion your medical license expense between employee income from the hospital where you regularly work and your independent contracting income would be more difficult but you can do it that way also. To moonlight you HAD to have a full license; as a resident you might in my state function on a training license. When I was a resident some of my fellow residents had not yet passed licensing exams and therefore functioned on the hospital license rather than having their own. If this is the case in your state you might take the total license expense on Schedule C (more advantageous to you) and if challenged make the point that you did not NEED that license for your residency position, but you did have to have it for the moonlighting. Your DEA license would be treated similarly. A resident may prescribe on the hospital's license, but working in the ER you had to have your own. Your Schedule C independent contractor earnings will be also subject to Social Security and Medicare tax. You don't have an employer paying half, so the Social Security rate is 15.3% and Medicare if I remember correctly 3.1%. Because you had self-employment income, you would be entitled to a SEP IRA, (or some more complicated plans) to which you may contribute about 14.3% of earnings after commuting and any other expenses, such as license (if you didn't need the license for residency work). This would reduce your taxable income. To work full time as a resident and thus be covered under the hospital's health insurance program and maybe being allowed to eat for free in the cafeteria, and then also have self-employment income is a good deal. Having done this this year will increase your income for 2001 of course, and raise the threshold for "safe harbor". However, for 2002 you won't have taxes to pay on the Roth installment, so there may be no need for quarterly estimated taxes. By all means, learn to deal with Schedule C yourself. Even if when you finish residency and are hopefully making gobs of money, and have someone prepare your taxes for you, you will still need to give the tax preparer the figures, so you really need to know how to do it yourself! Best wishes, Chris
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