Wednesday, April 16, 2003
Okay, One More
I saw something in GruntDoc's blog today that reminded me of my experiences as an independent contractor, ten years ago when I first got out of residency.
This is how moonlighting works (and how residents get into financial trouble): after one year of internship, an MD is qualified to apply to the state for a license to practice medicine. Armed with said license, residents can moonlight in other jobs (usually after-hours clinics), where they can learn and get paid at the same time. Almost all moonlighters are paid as independent contractors, which means you have to estimate and pay taxes quarterly, as opposed to regular full-time employee paychecks which have taxes taken out as you go along. The good news is the paychecks look huge when you get them. The bad news is the tax bill can come as a nasty surprise if the moonlighter is a novice. This usually happens in the first tax season after the resident has started moonlighting and has not bothered to estimate quarterly taxes for the first few months.
One of my friends from residency was sitting in the doctors' lounge one April morning lamenting her financial situation as follows:
"I started moonlighting to pay off my credit card bill, and everything was great until I saw how much I owe in taxes! What am I going to do?"
"Put your taxes on your credit card and start all over again," I suggested.
I thought this was funny. She didn't.