Important Tax Opportunity for Physicians
December 2, 2010
The IRS has recently made an administrative determination to accept the position that medical residents qualify under student exception. Under this provision, compensation paid to medical residents prior to April 1, 2005 is exempt from FICA taxes. This means both medical residents and the institutions that employed medical residents are eligible to receive FICA refunds, provided a timely filed FICA refund claim was made. While the period of limitations for filing a claim has now expired, it is possible that the institution that employed the medical resident has filed a timely refund claim on their behalf. In many cases, these FICA claims can be significant if it covers multiple years (perhaps $5K - $10K or more for both the Physician and the institution). Wipfli has had multiple success stories from our physician clients and agree it is worth the effort to make a phone call to inquire if the institution filed a timely claim.
If you are interested in further pursuing this opportunity, please contact Tom Krieg for assistance at 715.843.7443 or firstname.lastname@example.org.
Please note: Physicians who were in residency ten or more years prior to April 1, 2005 are less likely to secure a refund claim since institutions generally did not challenge this issue prior to that timeframe.