In 2016, I had what most physicians would consider a pretty great job.
I was practicing emergency medicine and palliative care at a large medical center.
Good salary.
Pension.
Health and dental insurance.
Even life and disability insurance.
I had the thing physicians spend more than a decade training for:
Security.
But in exchange for that security, I eventually realized I had given up something else.
Control.
Then I Started Learning About Money
For years, I didn’t understand taxes.
I went to medical school.
Residency.
Fellowship.
I learned how to save someone’s life.
But nobody taught me how to read my own tax return.
Once I started learning, something became painfully obvious.
As a high-income W-2 physician in California, I had very few levers to pull.
I earned my salary.
Taxes came out.
And a huge portion of what I earned disappeared before the money ever reached my bank account.
There was nothing inherently wrong with being an employee.
I loved the security.
What bothered me was the lack of control.
So rather than quitting medicine and going all-in on entrepreneurship...
I took a different approach.
I Became a Hybrid Physician
I kept my physician job.
But I started building things on the side.
That turned out to be one of the most important financial decisions I’ve made.
Business #1: Real Estate
I had already spent countless hours studying real estate investing.
I loved looking at houses.
I loved exploring neighborhoods.
I loved analyzing deals.
One day, my wife basically asked:
“You spend so much time doing this anyway. Why don’t you get paid for it?”
Great question.
So in 2020, I became a Realtor.
The first year?
I lost money.
Turns out “I really like looking at houses” is not a business plan.
But here’s where the tax rules start to matter.
A business loss is only useful if the activity is actually a business.
Under IRC §183, the hobby loss rules, an activity has to be engaged in for profit.
Not “engaged in because it’s fun and you can write things off.”
The IRS looks at things like:
Do you run it in a businesslike manner?
Do you have real expertise?
How much time do you actually put in?
Have you ever made money at it?
I wasn’t playing Realtor.
I was building something I intended to turn into a real business.
And under the right facts, a legitimate business loss can offset other taxable income.
Emphasis on legitimate.
By 2022, the business was profitable.
And that’s when things became even more interesting.
Now I had real business expenses.
Equipment.
Technology.
Education.
Business assets.
These are what the tax code calls ordinary and necessary business expenses. IRC §162.
And certain business property can be expensed right away under IRC §179 or bonus depreciation, instead of being written off slowly over many years.
Translation?
Instead of spending only with after-tax dollars, I was buying things my business actually needed.
And the tax code helped pay for part of it.
I wasn’t buying things just to get a deduction.
I was investing in a business, and learning how the tax code treated those investments.
That’s a very important distinction.
A Quick Note, Since Someone Will Ask
No, becoming a Realtor did not make me a “real estate professional” for tax purposes.
That’s IRC §469(c)(7), and it’s a much higher bar than most physicians realize.
You generally need more than 750 hours in real property trades or businesses, and more than half of all your personal services for the year in those activities.
If you’re working full-time clinical hours, that second test is brutal.
Having a real estate license does not get you there by itself.
That’s a whole post of its own.
Coming soon.
Business #2: Tax
Then, in 2022, I started my tax practice.
Once again...
Year one wasn’t profitable.
I was building.
Learning.
And investing heavily in my education, including being a half-time student at a graduate-level tax law program while still working clinically.
Over time, that side business grew.
And something unexpected started happening.
As my businesses grew, I didn’t need to practice medicine as much.
I went down to three days a week.
And my income didn’t drop with it.
That changed the equation completely.
The Biggest Change Wasn’t My Tax Bill
It was optionality.
As a pure W-2 physician, most of my financial life was predetermined.
Earn paycheck.
Withhold taxes.
Max retirement accounts.
Invest what’s left.
Repeat.
There’s nothing wrong with that path.
For many physicians, it’s an excellent one.
But ownership gave me another set of tools.
Business income.
Business deductions.
Retirement-plan options I didn’t have as an employee.
Real estate.
Investment opportunities.
And, eventually, the ability to decide how much medicine I actually wanted to practice.
That’s when my definition of wealth started changing.
When I was younger, I thought wealth meant one thing.
Make more money.
Today, I think differently.
Wealth means control over my time.
Ironically, learning about taxes ended up being about much more than taxes.
I’m Still Figuring It Out
I don’t want to make this sound like a perfectly executed master plan.
It wasn’t.
I’ve experimented with multiple businesses.
Some worked.
Some didn’t.
I’ve made investments I probably wouldn’t make again.
I’m still deciding what role real estate will play in my future.
And I’m still learning about taxes every single day.
But today I have something I didn’t have in 2016.
More freedom.
More flexibility.
More control.
And I’m spending more of my time doing things that actually interest me.
That, to me, is wealth.
Why I’m Sharing This With Physicians
I’m not particularly special.
I’m not an entrepreneurial genius.
And I’m certainly not smarter than the average physician.
I simply started learning about money and taxes.
Then I experimented.
One small step at a time.
That’s why I think the hybrid physician model is worth considering.
You don’t have to quit your W-2 job.
You don’t have to give up your pension tomorrow.
You don’t have to start five businesses.
You can keep the security of medicine while gradually building ownership outside of it.
Maybe that’s a practice.
Maybe it’s consulting.
Maybe it’s real estate.
Maybe it’s something completely unrelated to healthcare.
The point isn’t to start a business just to create deductions.
The goal is to build something you actually want to own, and to understand how the tax code treats it along the way.
Are you a hybrid physician building something on the side?
I’d genuinely love to hear what you’re working on in the comments.
The Bottom Line
Medicine gave me security.
Ownership gave me optionality.
Tax knowledge helped me combine the two.
And that gave me something I value more than maximizing my income:
Control over my time.
Sometimes the first step isn’t quitting medicine.
It’s simply creating another option.
📅 Are you a physician thinking about building something outside your W-2 job?
Book a free consult:
Disclaimer
This article describes my personal experience and is for educational purposes only. It is not legal or tax advice. Starting a business does not automatically make business losses deductible against W-2 income. Deductibility depends on factors including profit motive, basis, at-risk limitations, passive activity rules, and your specific facts and circumstances. Tax and investment strategies should be evaluated with a qualified professional before implementation.