Low Income? Huge Opportunity.

The biggest mistake residents make is thinking, "I'll worry about money when I make real money."

By waiting, you miss the chance to lock in 12% or 22% tax rates on Roth conversions. You miss the low-income tax filings that set your income-driven loan payments at their lowest. You develop bad spending habits that scale up with your income.

"Almost every attending I meet wishes they had done two things in residency: started Roth contributions early and kept living on a resident budget for two more years."

Bryan Martin, CPA

Maybe you worked before med school and have an old Traditional 401(k) or IRA.

As an attending, converting that to Roth would cost you 37%+ in taxes. But as a resident, you might only pay 12% or 22%.

We analyze "filling the bracket." We calculate exactly how much you can convert before bumping into the next tax tier. This is essentially buying tax-free growth at a massive discount.

Plus: That $50k grows tax-free forever. At 7% over 30 years, it becomes ~$380k tax-free.

Learn About Roth Conversions

Tax planning in training isn't one decision — it's a short sequence of small, dated moves. Miss one, and you can't go back for it. Here's the sequence we walk residents through.

MS4 / final year of med school. File a federal tax return even if you earned nothing. It feels pointless — it isn't. That $0-income return is what your loan servicer uses to set your income-driven repayment amount when you certify as an intern, which is how residents end up with $0/month payments during intern year. Skip the return, and your first-year payments get calculated off your intern salary instead.

Intern year. You only earn a half year of salary — often $30,000–$35,000 of taxable income — which can leave you in the 12% federal bracket. That makes intern year the single cheapest year of your life to fund Roth accounts and convert old pre-tax balances. Open a Roth IRA, contribute what you can, and if your program offers a Roth 403(b), point your deferrals there.

PGY-2 and PGY-3. Claim the student loan interest deduction while you still qualify — it's an above-the-line deduction of up to $2,500, and the income phase-out means most attendings lose it forever. If you're married (or about to be), have someone run the filing-status math before you file — the wrong checkbox can raise your loan payment by more than it saves in tax. We cover that on our student loan tax strategy page.

Final year of training. This is the last call for cheap Roth conversions. The year you finish is a split year — half resident salary, half attending salary — so the bracket math has to be done on projected full-year income, before December 31, not at tax time. It's also when your signing bonus lands: it's fully taxable, and employers routinely under-withhold on it, so set aside 30–40% before you spend a dollar.

Moonlighting pay almost always arrives on a 1099, not a W-2. That makes you a sole proprietor with a Schedule C — and it changes which expenses count.

Board exam fees and prep materials used for the moonlighting work, DEA and state license costs allocable to it, malpractice premiums you pay for those shifts, and a home office where you do your charting can all be deducted against the 1099 income. A resident earning $15,000 moonlighting who claims $3,000 of legitimate expenses and puts part of the remainder into a Solo 401(k) keeps dramatically more of every shift.