It's that time of year where we have lots of questions about taxes. Today, we talk about how to file an amendment to your 2022 tax return. The good news is it's not hard and it is not a big deal. We also talk about what to do if your tax professional makes a mistake on your taxes. Next, we get into some questions regarding tax-loss harvesting and what the averaging method is. We discuss if there is ever a good reason to use a robo advisor to help with tax-loss harvesting. Finally, we answer a question about the pro rata rule as well as a few student loan questions.

 

Filing an Amendment to a Tax Return 

“Hi, Dr. Dahle. I had a question about filing an amendment to my 2022 tax return. I have already filed my taxes for 2022, and it has been accepted. Since then, I have unexpectedly received a 1099 in the mail. Long story short, this is because of some reimbursement for credentialing on a job that I will start this year in 2023 that I didn't expect to be counted as income, but it is. So, here we are.

As the saying goes, I would like to pay every dollar that I owe but not a cent more. And these are dollars that I owe. It's a relatively small amount, and I can easily cover it. However, I had a question about the timing of an amendment filing. Should I give any consideration to the April 18 tax deadline? Try and do it before? Do it after? Are there any other dates that I should be aware of? Could I just push this to my 2023 tax filing? What would you do in this situation?”

First of all, here is a tip to help avoid this. There's no big rush to file your taxes. Mine are going in in October. You do not have to file your taxes in January or February. Give it a second because this happens all the time—that you get a tax form that you weren't expecting. Most of them come out by the end of February or so, unless we're talking about K-1s. K-1s might not show up until August or September. You never know when a K-1 is going to show up. If a partnership files an extension, it doesn't even have to file until September 15. You don't get the K-1 until a few days after that. Be aware of that. If you're involved in any partnerships that issue K-1s, it's not unusual at all to have to file late. But even those who are not, what's another month? Are you really getting that much as a tax return these days? Probably not. Your refund is not going to be that big, so you don't need to rush it. Give it a second for all your forms to come in. Save yourself some hassle down the road.

As far as amending your tax returns, it's no big deal. I've amended many tax returns. A little screw-up here. A little screw-up there, fine. The IRS recognizes we're all human. The way you amend it is to send in a 1040-X. It's not that hard of a form to fill out. In fact, I've only ever done them by hand because they're just not that hard. You only have to fix the stuff that was wrong. That's what you need to do to pay tax on this 1099 income. No, you cannot wait until 2023 to pay it. This is 2022 income. You need to pay it. Should you do it before April 15? Ideally, yeah, or April 18 or whatever the date is this year. Yeah, you want to do it by then because after that, you have to start paying interest on it. If there are taxes you were supposed to pay and you didn't pay, you have to pay interest. So, make sure you do that before April 15.

I think I answered all your questions there. 1040-X is no big deal. Don't be afraid of it. It's not like it automatically gives you an audit or something. When you screw up on your taxes, you do a 1040-X. No big deal.

By the way, if you need help with taxes, if you're looking for a tax strategist in particular, somebody to help you in a really complicated tax situation, check out whitecoatinvestor.com/tax-strategists. That's where we keep a listing of people that can help you with your taxes, and we're always looking to add more people there. This is probably the most commonly asked-for thing that I don't have enough people to refer white coat investors to. Everyone always is looking for somebody that offers a good deal on tax preparation and on giving tax advice. You have to recognize that those two things are not necessarily always the same thing. There are very few people who specialize in taxes for doctors. If that's the service you're interested in, check out those companies. If not, muddle through with the local person you've got or learn to file them yourself. I did that myself for many, many years. You learn a lot about how to live your tax life doing that although it can be a bit of a pain. Plus, you end up doing a lot of 1040-Xs.

More information here:

You Should Do Your Own Taxes at Least Once — Here’s How I Do Mine

 

Tax-Loss Harvesting 

“I was recently listening to a podcast, and they talked about tax-loss harvesting and selling losses with the averaging method vs. the specific share identification method when booking losses from mutual funds for tax-loss harvesting. Could you explain that a little bit more? And is that pertaining to selling specific lots of a mutual fund that you purchased, like you have discussed before, or something different?”

All right, good question. This is one of those things that's easier to show than it is to describe, but I'm going to do my best. There are actually a lot of things in personal finance that are like that. That's why I have a blog. You guys should check it out.

This is fascinating. I'm at WCICON last month talking to people who didn't know there was a blog. It's amazing to me. The White Coat Investor was originally a blog. The blog was started in 2011, and if you're dedicated enough to come to the conference, you probably ought to subscribe to our emails. We'll send them to you in your email box and you can read the blog posts at your convenience. It's very nice. But anyway, let's try to do this on the podcast.

When you buy shares of a security—a mutual fund—you get tax lots. If you buy some on January 15, that's one tax lot. You buy some more on February 20, that's another tax lot. This only matters in a taxable account, of course. It doesn't matter in your Roth IRA or your 401(k). And so, maybe you have multiple tax lots all purchased at a different price. Maybe you bought shares at $35.84 with one lot; then you bought shares at $38.27 with the other lot.

Well, when you go to tax-loss harvest, you only want to sell stuff with a loss, No. 1. Usually, you want to sell the stuff with the biggest loss. And so, the idea is you want to use specific share identification so that you can say, “I only want to sell those ones I bought on January 15. I don't want to sell the other ones. I have a gain on those or I don't have a loss yet on those or whatever.” That's why you use a specific share ID.

If you do not change the settings on the account—which is easy to do, whether you're using Vanguard or Fidelity or Schwab—the usual default is the average cost. And then they basically are selling shares from both lots. You don't want that unless you're selling all of them. If you're selling everything, it doesn't matter. You can use average cost, but if you're only selling some of your lots because you bought some two years ago at a much lower price, you want to use specific share identification. That way, you're only selling that lot. I hope that explains it. If not, send me an email; maybe we'll do a blog post on it.

More information here:

How to Tax-Loss Harvest – Step-by-Step Guide

 

How to Correct Your Tax Professional's Mistake  

“I recently have undertaken trying to understand more about taxes and my tax situation. I was reviewing my tax return documents from last year and noticed that the financial group who I paid a lot of money made several mistakes on my tax forms. Mistakes including saying that I did not earn any income on my rental property, even though they did document that the year prior.

This year, they wrote that I made zero income on my rental property and other mistakes, such as saying I contributed more to my state 529 than I actually did since my other child has a different state's 529. I was wondering if there is a way to file a correction. I’m planning to hire a new CPA. I am wondering what would be the consequences and if there's a way to correct these mistakes.”

Yes, you can file corrections, that's no big deal. But typically when I pay somebody else to do my taxes, they're going to be filing the correction. They screwed up my taxes; I expect them to do it. That's part of what I paid them to do, and they didn't do it right. They can fix it on their dime, and they usually do. And in fact, when it's a bad mistake, they often refund me some of what I paid them. I don't know what to do with you changing from one firm to another. If you have the new firm fix it, you're going to pay for that. If you go to the old firm, they should be doing that for free, and they ought to have an apology to go with it. Whether you want to go back to them, I don't know. I'm not sure why you're changing firms, but maybe it's not worth going back to them because you're so mad at them. I don't know.

But here's the deal. They just file a 1040-X, and you report a little bit more income than you otherwise had or you fix the 529 filing or whatever it was. No big deal. It just goes in and the IRS keeps it and that's considered the final tax return. I've had many, many tax returns that had to be corrected. However, keep in mind you might be wrong on some of those corrections. For example, a lot of people get income from real estate, but when it's covered by depreciation, it's not actually taxable income. It's possible—and I've had this happen before as well—that I thought it was a mistake. It turned out when I really dug into it, it wasn't a mistake. Make sure that you're actually correcting true mistakes before you start doing anything to correct them.

 

Robo Advisors and Tax-Loss Harvesting 

“Hi, Dr. Dahle. This is Clark in New York City. My question is in regards to using a low cost AUM robo advisor for tax-loss servicing to save for a down payment on a home. Our time horizon is 3-5 years. It's my understanding that based on historical returns, there's about a 90% chance that you'll have a positive ROI in the market if you stay invested for four years.

Do you think this is a reasonable strategy to help offset any capital gains tax that we would have at a time of withdrawal when purchasing a home? I know you generally advise against robo advisors, but it seems that with the current bear market and being able to tax-loss harvest on a relatively short investing horizon, we're mitigating some downside and a tax bill at the time we'll liquidate these equities. We’re currently invested 80/20 with a plan to shift more conservative as we get closer to needing the funds.”

There are a lot of questions and issues wrapped up in that particular question. The first one that we probably ought to talk about is whether you should be saving for a down payment using stocks. You're talking about a date 3-4 years away. That's a really short time period to be using stocks. What are you going to do a year from now? Now you've got a two- to three-year time period, and you're still in 100% stocks. Two years from now, you're still in 100% stocks. You might need the money in a year. At what point are you going to dial that back? Because what can happen is things can look hunky-dory, hunky-dory, everything's fine, everything's fine. You're two months before you need the money, and stocks drop 50%. That does happen.

The stock market is not a place for short-term savings. If you want to put a little bit of that money at risk, you want to use a balanced fund of some kind or put some of it into bonds or just do it in CDs, I think that's fine. I think it's also perfectly fine to take that entire down payment and dump it into a money market fund. The Vanguard Federal Money Market Fund today, as I record this, is paying over 4.5%, and the Fed's talking about boosting short-term interest rates another half percent here in the next month or so, at which point they'll be paying 5%. That's awfully good for what's essentially a guaranteed return.

That's probably what I'd be doing with down payment money that I needed in three years. If you don't know if you're really going to buy the house—it's kind of uncertain, and maybe this is actually part of your long-term portfolio—fine, maybe you can put it into stocks, especially if the consequences of it dropping in value 50% a month before you need the money aren't that big for you. Maybe you can do that. But I'd be careful about that.

The next issue is do you use a robo advisor? The problem with robo advisors is that they only do your IRAs and your taxable account. They're not going to manage your 401(k). If you need an advisor for your taxable account and your IRA, don't you need an advisor for your 401(k)? If you're going to hire an advisor for your 401(k), why can't they do everything? There are not a lot of people for whom robo advisors are the perfect fit because of that issue, especially among docs. Would I hire one just to do tax-loss harvesting? No. Tax-loss harvesting is not that complicated. It doesn't need to be done every day. Maybe you can get a few more losses out of it if you got some computer doing it all day long every day. Is that going to be enough to make up the fee on the robo advisor? I'm pretty skeptical.

If I do my own tax-loss harvesting, even in a big nasty bear market, maybe I do it two or three times a year. I try not to do it any more often than every couple of months. Because what happens is you end up turning your qualified dividends into non-qualified dividends. You make mistakes and you get wash sales, and it's just a pain if you try to do it in a frenetic manner. Plus, you start needing more than two tax-loss harvesting partners. It's just way easier if you do it much less often. Most of the time in a big bear market, you can get 95% of the benefit from tax-loss harvesting with like 2% of the work compared to what these robo advisors are trying to do by tax-loss harvesting every day.

I'm really not impressed with this idea of hiring a robo advisor just for the tax-loss harvesting. If you feel like you need help with the asset allocation and management and that stuff, fine, robo advisors are cheaper than hiring somebody else. If it works for you because you only have an IRA or you only have a taxable account, I guess that works for you. But this sounds like an unnecessary complication in your life. I don't think I would do what you're talking about doing. Good luck with getting the house and sorting this out. I hope it works out great for you.

More information here:

The Pros and Cons of Robo Advisors

 

Pro Rata Rule

“Hi, my name is Nick and I have a question regarding the pro rata rule. In 2021, I opened up a traditional IRA account for my wife and myself. We both rolled ours into a Roth IRA. We did a Backdoor Roth, and I totally forgot about the pro rata rule because my wife has had an old IRA from a previous job that we still have. We didn't commingle the funds, so the $6,000 we put into the traditional IRA was a whole new brand new account. Then, we rolled that money, did the Backdoor Roth. So, it wasn't commingled, but when I tried to get ahold of my accountant last year to make the correction, the accountant has since passed away. Somebody else has taken over his book of business, and they just seem to not really understand or not know what they're doing. They can't get back to me. I'm just trying to get an idea of what I can do to make the correction and see if I can apply it this year.”

You guys see what I'm talking about? It's hard to get accountants to refer white coat investors to because they keep retiring or going away or going out of business or getting full. It's hard. It's something that I'm asked for all the time, and we don't have enough people to refer to. If you have somebody really good, send them our way and we'll see if we can add them to our list.

Here's the deal with this situation. Your conversion last year got pro rated or your wife's conversion got pro rated because she had an outstanding IRA. This is what happens. You cannot have money in a SEP IRA, SIMPLE IRA, traditional IRA, rollover IRA on December 31 of the year you do a conversion, or that conversion will be pro rated. There's no getting around it. Pro ration is not illegal; it's not the end of the world, but it kind of defeats the purpose of what you were trying to do. What people do to avoid getting pro rated is they roll that money into a 401(k) or they just convert it all to an IRA. Once you've been pro rated, you've now got the cream in the coffee. Some of that money is now pre-tax money and some of that money is now basis or money that's already been taxed.

You can try to isolate the basis by rolling this rollover IRA into a 401(k). They'll only take the pre-tax amount and you have to leave the rest behind, and then you can convert that to a Roth IRA. That's probably the most elegant solution if you can pull that off. An easier solution for a lot of people, especially with small IRAs, is to just convert the whole thing. Yes, you'll pay some taxes on it, but if this thing is like a sub-$20,000 IRA, that's a pretty easy way to deal with it. Then, that cleans it all up, right? Because yes, you were pro rated last year, but then you got the benefit of that pro ration this year. It all works out just fine. You just end up having to do a Roth conversion on the whole thing.

That doesn't work for people that have $500,000 IRAs. I don't know how big your IRA is and whether this is something you can do or not, but you have to look into that and see what the size is to decide what you want to do about that. But if it's a big one, you can look into isolating the basis and rolling it back into a 401(k) if she's eligible for one or just dealing with it. You can just live with an IRA and keep track of the basis in there indefinitely going forward. When you pull that money out later, the basis comes out tax-free. It's not illegal to be pro rated. It's just a paperwork pain, and it eliminates what you were trying to accomplish.

 

How to Manage Student Loans in Med School

“My daughter started med school in July of 2022 and is borrowing about $70,000 worth of loans. What is the best approach for a medical school student loan from year 1 to year 4, and how she can plan on refinancing it or start saving to pay it back starting from year 1 of med school? Any advice will help.”

The best approach is to be born into a wealthy family that just has money coming out of their ears and can pay for your med school. That's the best approach—not take out any student loans. The best student loan is the one you never took out. I'm presuming that is not an option for your daughter. She's going to be borrowing for her education, like about three-quarters of medical students. The goal during med school is just to keep that down as much as you can. The average, if you look at the exit surveys for MD students, is about $205,000. It's about $255,000 for DO students. Half of people have more, and it's not unusual at all for people to finish with $300,000, $400,000, $500,000. That continues to grow during residency and fellowship.

As a general rule, people take out federal loans first. The reason why is because they qualify for income-driven repayment programs. They qualify for Public Service Loan Forgiveness (PSLF) down the road. If you have to borrow money, you first max out your federal amount, and then if you need more than that, you have to take out private student loans. You can't do a lot about them during med school. They just kind of sit there and gain interest unless you're lucky enough to be in med school during a student loan holiday, like those who have been in there the last few years.

But once you get out of med school, you can start doing something about it. Your private student loans should be refinanced right away. You can get payments through some of the people on our website. If you go to the recommended tab at whitecoatinvestor.com and you go down to Student Loan Refinancing, you can see all the best companies to refinance your student loans with. You should refinance your private student loans as soon as you get out of med school. There's no point in paying 7%, 8%, 9% if you could be paying 5% and still only have to deal with $100 a month payments.

For federal loans, what most people do during residency and fellowship is put them into an income driven repayment program. These things are always changing. Every few years a new one comes out, and they're talking about a new one coming out later this year. But for most students, the right answer is the Revised Pay As You Earn (REPAYE) program. You put your money in that, and then you only have to make payments during residency or fellowship in accordance with your income. Low income, low payments. If you file taxes as an MS4 showing zero income, you usually have $0 payments during that intern year. Take advantage of that.

If you're really going for Public Service Loan Forgiveness, there's a little trick you can do where you consolidate your loans—not refinance them—right when you come out of medical school. That helps you skip the six-month grace period. You don't want to skip it when you're going for Public Service Loan Forgiveness. You want as many of your 10 years’ worth of payments to be made at $0 or something close to that because that helps you end up with more forgiven.

If you're in a complicated situation—if you're married to another earner, for instance, and maybe one of you is thinking about PSLF—you ought to consider paying for some advice from a student loan specialist such as studentloanadvice.com. For a few hundred dollars you'll get the answers to the math for what you should do, what program you should be in, how you should be saving for retirement during residency, how you should be filing your taxes to maximize that Public Service Loan Forgiveness. They'll do any sort of student loan questions you have, but those are the people who benefit the most, the ones with the really complicated student loan situations. Check that out, studentloanadvice.com if you need more advice there.

But in the situation of your daughter, the goal is just to keep the debt down as much as possible. Help her as much as you can. Encourage her to live frugally, get a roommate. If she has a partner, send the partner out to earn some of the living expenses, and live like you're a broke medical student because you are. You're worse than broke. If broke is $0, by the time a med student comes out owing a couple hundred thousand, they're far, far worse than broke. I would encourage frugal living and smart student loan management. Good for you for thinking about this in the beginning. A lot of people don't think about it until the end.

More information here:

Is Public Service Loan Forgiveness Worth It for Doctors?

 

Public Service Loan Forgiveness

“Hey Jim, I had a question about Public Service Loan Forgiveness. I'm in my first year out of training working at an academic center, and I was planning to try and get my loans forgiven. I have one of those weird schedules where I work seven days on and then have 14 days off although I'm considered full-time. I know in order to qualify for forgiveness, you have to be working at a not-for-profit center and be working full-time, or at least 30 hours a week—whichever is greater or so it says. I guess I was a little worried that I wouldn't qualify because if you average my hours together, I don't actually work above 30 hours per week even though my institution does consider me a full-time employee. Any comment on this would be much appreciated.”

This is a question I've heard a number of times in the past. Go to the PSLF form and if you Google “PSLF form,” you'll get there within a few clicks. Scroll down to section 3. This is the employer information to be completed by the borrower or employer. That's kind of cool that it can be completed by the borrower. That's ideal, right? It's best if you fill the form out, then you get to put whatever you want on it. Apparently, that's OK. Then, apparently section 4 is where the employer actually has to certify that what was put in section 3 is true.

Here's the deal. If you go to section 3, you scroll down to No. 7, it says employment status. There are two boxes. One is full-time; one is part-time. If you consider yourself full-time and the employer considers yourself full-time, I would suggest checking the full-time box. Then nobody at PSLF, the Department of Education is going to really question that if that box is checked and your employer signs it. When you look at the instructions for the form it says “Employment eligibility.” If you scroll down there, it says you must be employed full-time by your employer. Generally, you must meet your employer's definition of full-time. However, for PSLF purposes, that definition must be at least an annual average of 30 hours per week.

Then it says, if you're a teacher in another position under contract for at least eight out of 12 months, you meet the full-time standard if you work an average of at least 30 hours per week during the contractual period and receive credit by your employer for a full year's worth of employment. Vacation or leave time provided by the employer, leave taken for a condition that is a qualifying reason for leave is equivalent to hours worked in qualifying employment. It says 30 hours, but it sounds to me like there's a heck of a lot of gray there. When the expectation in your field is like that of teachers so that you work eight or nine months a year, I think that's OK.

The other way you can look at it is you can say, “Well, I was on leave for 25 weeks a year” and then all those hours count as well. There's no way if I was doing the equivalent of full-time work—which if you're doing seven on seven off as a hospitalist or an intensivist or something—there's no way I would not check the full-time box. I think your employer ought to sign off on it despite the 30-hours-per-week thing. Here's the other deal. If you actually add everything in, you add in your CME time, you add in the time you stay late after your shift or come in early, or you spend time on committees or doing paperwork or dealing with licensure or board certification, you get a whole bunch more hours that you're probably not thinking of as your work hours. You throw those in with your regular work hours and 10 days of holidays a year and four weeks of leave a year, you're going to be over 30 hours.

I think you're OK to go ahead and check that full-time box. This is not something I spend a lot of time worrying about unless your employer was fighting you on it. But if I were you, I'd fill out section 3 for your employer's convenience and put that paper in front of them and have them sign it in section 4. If you're only working part-time, if you're doing what I'm doing, six shifts a month, don't cheat on it and go tell them you're working full-time. That's not full-time. But if you're working 15 eights a month as an emergency doc, that's full-time and you ought to check the full-time box.

 

Laurel Road is committed to serving the financial needs of doctors, including helping you get the home of your dreams. Laurel Road’s Physician Mortgage is a home loan exclusively for physicians and dentists featuring up to 100% financing on loans of $1 million or less.*1 These loans have fewer restrictions than conventional mortgages and recognize the lender’s trust in medical professionals’ creditworthiness and earning potential. Borrowers can also get up to $650 off closing costs!*2 For terms and conditions, please visit www.laurelroad.com/wci.

Disclosures*

 

Continuing Financial Education 2023 Course Sale 

Save $100 on this year's amazing CFE course. The sale runs April 4-17, 2023. This course is put together every year with all of the amazing content from WCICON. It qualifies for CME, and it's packed full of incredible information to aid you in your journey toward financial literacy and independence. It has fantastic lectures and courses to help reduce burnout, create a better work/life balance, and help create overall wellness in your life. Check it out today at wci.com/cfe2023.

 

Milestones to Millionaire Podcast

#112 — This doc is our second returning guest. Since she paid off her student loans in August 2021, her and her husband were able to take a financial risk, leave their jobs in academia, and start a private direct primary care practice. They got their financial ducks in a row and recognized they wanted to change the way they worked. This change reduced burnout and created the life/work balance they want. She said making less money is worth the balance they have created.

Sponsor: SoFi

 

Full Transcript

Transcription – WCI – 309

Intro:
This is the White Coat Investor podcast, where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high-income professionals stop doing dumb things with their money since 2011.

Dr. Jim Dahle:
This is White Coat Investor podcast number 309 – Taxes.

Dr. Jim Dahle:
Laurel Road is committed to serving the financial needs of doctors, including helping you get the home of your dreams. Laurel Road's Physician Mortgage is a home loan exclusively for physicians and dentists featuring up to 100% financing on loans of a million dollars or less.

Dr. Jim Dahle:
These loans have fewer restrictions than conventional mortgages, and recognize the lender's trust in medical professionals credit worthiness and earning potential. Borrowers can also get up to $650 off closing costs.

Dr. Jim Dahle:
For terms and conditions, please visit www.laurelroad.com/wci. Laurel Road is a brand of KeyBank N.A. and an equal housing lender, NMLS #399797.

Dr. Jim Dahle:
All right, welcome back to the podcast. It is the 13th of March when I'm recording this, but this is going to drop on the 6th of April. So, right in the rush to finish up filing taxes for many of you, although I highly recommend extensions by the way, it's very convenient to have until October 15th to send in your tax returns. You still have to pay any tax due by April 15th but it is amazing how much less pressure there is on accountants later in the summer than on April 15th. So, something to consider is filing those extensions.

Dr. Jim Dahle:
One thing you can't get an extension for though, is our Continuing Financial Education 2023 course. That sale only goes through April 17th, and then it goes back to its normal price of $789. But for now through the 17th, you can get this for $699 and it will give you continuing medical education credit or dental continuing education credit.

Dr. Jim Dahle:
I don't know the exact number of hours as I'm recording this. It could be as many as 22. I'm sure it'll be at least 15, which is plenty to justify it to your CME folks that need to approve it. But you can use your CME dollars for this or you can write it off as a business expense.

Dr. Jim Dahle:
Tons of awesome content on wellness this year. Tons of awesome content on retirement for pre-retirees and retirees. There's still plenty of stuff for those early on in their career, but those were particular focuses of this year's conference and thus the course that's made from it. If nothing else, you get Stacy Taniguchi’s talk and that's worth the price of admission all by itself. You can check that out at whitecoatinvestor.com/cfe2023.

Dr. Jim Dahle:
All right. Today we are going to be talking about what is concerning to you, which at this time of year is a lot of tax stuff, it turns out. So, let's talk about some tax stuff. First question off the Speak Pipe. Let's go.

Speaker:
Hi, Dr. Dahle. I had a question about filing an amendment to my 2022 tax return. I have already filed my taxes for 2022 and it has been accepted. Since I have unexpectedly received a 1099 in the mail. Long story short, this is because of some reimbursement for credentialing on a job that I will start this year in 2023 that I didn't expect to be counted as income, but it is. So, here we are.

Speaker:
As the saying goes, I would like to pay every dollar that I owe, but not a cent more. And these are dollars that I owe. It's a relatively small amount and I can easily cover it. However, I had a question about the timing of an amendment filing. Should I give any consideration to the April 18th tax deadline? Try and do it before? Do it after? Are there any other dates that I should be aware of? Could I just push this to my 2023 tax filing? What would you do in this situation? And I appreciate your advice. Thanks for all you do.

Dr. Jim Dahle:
All right, that's a great question. First of all, a tip to help avoid this. There's no big rush to file your taxes. Mine are going in in October. You do not have to file your taxes in January or February. Give it a second because this happens all the time that you get a tax form that you weren't expecting. Most of them come out by the end of February or so, unless we're talking about K-1s. And K-1s might not show up till August or September. You never know when a K-1 is going to show up.

Dr. Jim Dahle:
If a partnership files an extension, it doesn't even have to file till September 15th. And so, you don't get the K-1 until a few days after that. So, be aware of that. If you're involved in any partnerships that issue K-1s, it's not unusual at all to have to file late. But even those who are not, what's another month? Are you really getting that much as a tax return these days? Probably not. Your refund is not going to be that big, so you don't need to rush it. Give it a second for all your forms to come in. Save yourself some hassle down the road.

Dr. Jim Dahle:
As far as amending your tax returns, it's no big deal. I've amended many tax returns. A little screw up here. A little screw up there, fine. The IRS recognizes we're all human and the way you amend it, you send in a 1040-X. It's not that hard of a form to fill out. In fact, I've only ever done them by hand because they're just not that hard. You only have to fix the stuff that was wrong. And so, that's what you need to do to pay tax on this 1099 income.

Dr. Jim Dahle:
No, you cannot wait until 2023 to pay it. This is 2022 income. You need to pay it. Should you do it before April 15th? Ideally, yeah, or April 18th or whatever the date is this year. Yeah, you want to do it by then because after that you got to start paying interest on it. If there's taxes you were supposed to pay and you didn't pay, you got to pay interest. So, make sure you do that before April 15th. I definitely would.

Dr. Jim Dahle:
I think I answered all your questions there, but 1040-X, no big deal. Don't be afraid of it. It's not like it automatically gives you an audit or something. When you screw up in your taxes, you do a 1040-X. No big deal.

Dr. Jim Dahle:
By the way, if you need help with taxes, if you're looking for a tax strategist in particular, somebody to help you in a really complicated tax situation, check out whitecoatinvestor.com/tax-strategists. That's where we keep a listing of people that can help you with your taxes and we're always looking to add more people there.

Dr. Jim Dahle:
This is probably the most commonly asked for thing that I don't have enough people to refer White Coat Investors to. Everyone always is looking for somebody that offers a good deal on tax preparation and on giving tax advice. And you got to recognize that those two things are not necessarily always the same thing. And that there are very few people who specialize in taxes for doctors.

Dr. Jim Dahle:
So, if that's the service you're interested in, check out those companies. If not, muddle through with the local person you've got or learn to file them yourself. I did that myself for many, many years. You learn a lot about how to live your tax life doing that although it can be a bit of a pain plus you end up doing a lot of 1040-Xs.

Dr. Jim Dahle:
All right. Let's talk some more about taxes, specifically tax loss harvesting. It's our next question off the Speak Pipe.

Speaker 2:
I was recently listening to a podcast and they talked about tax loss harvesting and selling losses with the averaging method versus the specific share identification method when booking losses from mutual funds for tax loss harvesting.

Speaker 2:
Could you explain that a little bit more? And is that pertaining to selling specific lots of a mutual fund that you purchased like you have discussed before or something different? Thanks.

Dr. Jim Dahle:
All right, good question. This is one of those things that's easier to show than it is to describe, but I'm going to do my best. There's actually a lot of things in personal finance that are like that, that's why I have a blog. You guys should check it out. This was fascinating.

Dr. Jim Dahle:
I'm at WCICON last month talking to people who didn't know there was a blog. It's amazing to me. The White Coat Investor was originally a blog. The blog was started in 2011 and if you're dedicated enough to come to the conference, you're probably ought to subscribe to our emails, we'll send them to you in your email box and you can read the blogs at your convenience. It's very nice. But anyway, let's try to do this on the podcast.

Dr. Jim Dahle:
When you buy shares of a security, a mutual fund, you get tax lots. If you buy some on January 15th, that's one tax lot. You buy some more on February 20th, that's another tax lot. This only matters in a taxable account of course. It doesn't matter in your Roth IRA or your 401(k). And so, maybe you have multiple tax lots all purchased at a different price. Maybe you bought shares at $35.84 with one lot, then you bought shares at $38.27 with the other lot.

Dr. Jim Dahle:
Well, when you go to tax loss harvest, you only want to sell stuff with a loss, number one. And usually you want to sell the stuff with the biggest loss. And so, the idea is you want to use specific share identification so that you can say “I only want to sell those ones I bought on January 15th. I don't want to sell the other ones. I have a gain on those or I don't have a loss yet on those or whatever.” And so, that's why you use a specific share ID.

Dr. Jim Dahle:
If you do not change the settings on the account, which is easy to do, whether you're using Vanguard or Fidelity or Schwab, it's easy to change these settings. But if you don't change them, the usual default is the average cost. And then they basically are selling shares from both lots. And you don't want that unless you're selling all of them. If you're selling everything, it doesn't matter. You can use average cost, but if you're only selling some of your lots because you bought some two years ago at a much lower price, you want to use specific share identification. And that way you're only selling that lot. I hope that explains it. If not, send me an email, maybe we'll do a blog post on it.

Dr. Jim Dahle:
Okay, next question. Again, on tax returns.

Speaker 3:
Hi Dr. Dahle. Thank you for all that you do. I recently have undertaken trying to understand more about taxes and my tax situation. And I was reviewing my tax return documents from last year and noticed that the financial group who I paid a lot of money made several mistakes on my tax forms. Mistakes including saying that I did not earn any income on my rental property, even though they did document that the year prior.

Speaker 3:
This year they wrote that I made zero income on my rental property, and other mistakes such as saying I contributed more to my state 529 than I actually did since my other child has a different states 529.

Speaker 3:
I was wondering if there is a way to file a correction. I’m planning to hire a new CPA. So, I am wondering what would be the consequences and if there's a way to correct these mistakes. Thank you.

Dr. Jim Dahle:
First of all, thank you for what you do. Just recording the podcast is relatively easy work compared to what you guys are all out there doing in the trenches day-to-day work. And if you're coming back from a bad day or a difficult shift or you’re just on your way in to work or working out or whatever, and nobody said thanks to you today, let me be the first.

Dr. Jim Dahle:
Yeah, you can file corrections, that's no big deal. But typically when I pay somebody else to do my taxes, they're going to be filing the correction. They screwed up my taxes, I expect them to do it. That's part of what I paid them to do and they didn't do it right. So they can fix it on their dime and they usually do. And in fact, when it's a bad mistake, they often refund me some of what I paid them.

Dr. Jim Dahle:
So I don't know what to do with you changing from one firm to another. If you have the new firm fix it, you're going to pay for that. If you go to the old firm, they should be doing that for free and they ought to have an apology to go with it. Whether you want to go back to them, I don't know. I'm not sure why you're changing firms, but maybe it's not worth going back to them because you're so mad at them. I don't know.

Dr. Jim Dahle:
But here's the deal. They just file a 1040-X and you report a little bit more income than you otherwise had or you fixed the 529 filing or whatever it was. No big deal. It just goes in and the IRS keeps it and that's considered the final tax return. So, it's not a big deal to file corrections. I've had many, many tax returns that had to be corrected.

Dr. Jim Dahle:
However, keep in mind you might be wrong on some of those corrections. For example, a lot of people get income from real estate, but when it's covered by depreciation, it's not actually taxable income. So, it's possible and I've had this happen before as well, that I thought it was a mistake. It turned out when I really dug into it, it wasn't a mistake. So make sure that you're actually correcting true mistakes before you start doing anything to correct them.

Dr. Jim Dahle:
All right, next question. This one also about tax loss harvesting.

Clark:
Hi Dr. Dahle. This is Clark New York City. My question is in regards to using a low cost AUM robo-advisor for tax loss servicing to save for a down payment on a home. Our time horizon is three to five years. It's my understanding that based on historical returns, there's about a 90% chance that you'll have a positive ROI in the market if you stay invested for four years.

Clark:
Do you think this is a reasonable strategy to help offset any capital gains tax that we would have at a time of withdrawal when purchasing a home? I know you generally advise against robo-advisors, but it seems that with the current bear market and being able to tax loss harvest on a relatively short investing horizon, we're mitigating some downside and a tax bill at the time we'll liquidate these equities. We’re currently invested 80/20 with a plan to shift more conservative as we get closer to needing the funds. Thanks Dr. Dahle. I appreciate your advice.

Dr. Jim Dahle:
There are a lot of questions and issues wrapped up in that particular question. The first one that we probably ought to talk about is whether you should be saving for a down payment using stocks. You're talking about a date three to four years away. That's a really short time period to be using stocks. What are you going to do a year from now? Now you got a two to three year time period, you're still in 100% stocks. Two years from now, you're still in 100% stocks. You might need the money in a year.

Dr. Jim Dahle:
At what point are you going to dial that back? Because what can happen is things can look hunky dory, hunky dory, everything's fine, everything's fine. You're two months before you need the money and stocks drop 50%. That does happen.

Dr. Jim Dahle:
The stock market is not a place for short-term savings. So, if you want to put a little bit of that money at risk, you want to use a balance fund of some kind or put some of it into bonds or just do it in CDs, I think that's fine.

Dr. Jim Dahle:
I think it's also perfectly fine to take that entire down payment and dump it into a money market fund. The Vanguard Federal Money Market Fund today as I record this is paying over 4.5% and the Fed's talking about boosting short-term interest rates another half percent here in the next month or so, at which point they'll be paying 5%. That's awfully good for what's essentially a guaranteed return.

Dr. Jim Dahle:
So, that's probably what I'd be doing with down payment money that I needed in three years. If you don't know if you're really going to buy the house, it's kind of uncertain, maybe this is actually part of your long-term portfolio, fine, maybe you can put it into stocks, especially if the consequences of it dropping in value 50% a month before you need the money aren't that big for you and maybe you can do that. But I'd be a little careful about that.

Dr. Jim Dahle:
The next issue is do you use a robo-advisor? And the problem with robo-advisors is that they only do your IRAs and your taxable account. They're not going to manage your 401(k). So if you need an advisor for your taxable account and your IRA, don't you need an advisor for your 401(k)? And if you're going to hire an advisor for your 401(k), why can't they do everything? So, there's not a lot of people for whom robo-advisors are the perfect fit because of that issue, especially among docs.

Dr. Jim Dahle:
Would I hire one just to do tax loss harvesting? No. Tax loss harvesting is not that complicated. It doesn't need to be done every day. Maybe you can get a few more losses out of it if you got some computer doing it all day long every day. Is that going to be enough to make up the fee on the robo-advisor? I'm pretty skeptical.

Dr. Jim Dahle:
If I do my own tax loss harvesting even in a big nasty bear market, maybe I do it two or three times a year. I try not to do it any more often than every couple of months. Because what happens is you end up turning your qualified dividends into non-qualified dividends. You make mistakes and you get wash sales and it's just a pain if you try to do it in a frenetic manner, plus you start needing more than two tax loss harvesting partners.

Dr. Jim Dahle:
It's just way easier if you do it much less often. And most of the time in a big bear market, you can get 95% of the benefit from tax loss harvesting with like 2% of the work compared to what these robo-advisors are trying to do by tax loss harvesting every day.

Dr. Jim Dahle:
So, I'm really not impressed with this idea of hiring a robo-advisor just for the tax loss harvesting. If you feel like you need help with the asset allocation and management and that stuff, fine, robo-advisors are cheaper in hiring somebody else. If it works for you because you only have an IRA or you only have a taxable account, I guess that works for you. But this sounds like an unnecessary complication in your life. I don't think I would do what you're talking about doing. Well, good luck with getting the house, and sorting this out. I hope it works out great for you.

Dr. Jim Dahle:
The quote of the day today comes from famous actively managed mutual fund manager Peter Lynch, who had the Magellan Fund for Fidelity for many years. He said, “You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets.”

Dr. Jim Dahle:
And I agree with that quote 100%. When you put money in the stock market, you've got to understand what stocks do. And what stocks do is lose money every third year. That's part of your duty as an investor is to lose money. In order to get those great long-term returns, you have to tolerate a lot of volatility along the way. And so, you should expect a bear market. A drop of 20% or more about every three years on average and a bigger bear market several times during your investing career.

Dr. Jim Dahle:
It is not unusual for stocks to drop 50% in value. They do that. And if you aren't prepared to hold onto them after they've done that, you're not going to earn those long-term returns.

Dr. Jim Dahle:
Last week we interviewed Bill Yount. We talked about recovering from mistakes and one of the mistakes he made in 2008 is he sold low. And you cannot do that and expect to be financially successful if you do that over and over and over. Or if you do it just once late in your career, that can be pretty much impossible to recover from.

Dr. Jim Dahle:
So, you've got to understand what stocks are. You've got to invest in them appropriately with long-term money. Once you do that, they're one of the greatest wealth creation mechanisms in the history of the world. But you've got to understand what they are, how they act, and how you invest in them. And the way you invest in them is using very low cost, broadly diversified index funds, bought and held for long periods of time. It works very, very well. But if you try to do something else, it's very easy to not do well in the stock market.

Dr. Jim Dahle:
All right, let's take a question from Nick. I think he wants to talk about the pro-rata rule. Everybody's favorite subject.

Nick:
Hi, my name is Nick and I have a question regarding the pro-rata rule. In 2021, I opened up a traditional IRA account for my wife and myself. We both rolled ours into a Roth IRA. We did a backdoor Roth and I totally forgot about the pro-rata rule because my wife has had an old IRA from a previous job that we still have.

Nick:
We didn't commingle the funds, so the $6,000 we put into the traditional IRA was a whole new brand new account. Then we rolled that money, did the backdoor Roth. So, it wasn't commingled, but when I tried to get ahold of my accountant last year to make the correction, the accountant has since passed away.

Nick:
Somebody else has taken over his book of business and they just seem to not really understand or not know what they're doing. They can't get back to me. So, I'm just trying to get an idea of what I can do to make the correction and see if I can apply it this year. Thank you.

Dr. Jim Dahle:
You guys see what I'm talking about? It's hard to get accountants to refer White Coat Investors to because they keep retiring or dying or going away or going out of business or getting full. It's hard. It's something that I'm asked for all the time and we don't have enough people to refer people too. So if you got somebody really good, send them our way and we'll see if we can add them to our list.

Dr. Jim Dahle:
In this situation, here's the deal. Your conversion last year got prorated or your wife's conversion got prorated because she had an outstanding IRA. This is what happens. You cannot have money in a SEP IRA, simple IRA, traditional IRA, rollover IRA on December 31st of the year you do a conversion or that conversion will be prorated. There's no getting around it. Proration is not illegal, it's not the end of the world, but it kind of defeats the purpose of what you were trying to do.

Dr. Jim Dahle:
What people do to avoid getting prorated is they roll that money into a 401(k) or they just convert it all to an IRA. Once you've been prorated, you've now got the cream in the coffee. Some of that money is now pre-tax money and some of that money is now basis or money that's already been taxed.

Dr. Jim Dahle:
So, you can try to isolate the basis by rolling this rollover IRA into a 401(k) and they'll only take the pre-tax amount and you got to leave the rest behind and then you can convert that to a Roth IRA. That's probably the most elegant solution if you can pull that off.

Dr. Jim Dahle:
An easier solution for a lot of people, especially with small IRAs is to just convert the whole thing. And yes, you'll pay some taxes on it, but if this thing is like a sub $20,000 IRA, that's a pretty easy way to deal with it. And then that cleans it all up, right? Because yes, you were prorated last year, but then you got the benefit of that proration this year. And so, it all works out just fine. You just end up having to do a Roth conversion on the whole thing.

Dr. Jim Dahle:
That doesn't work for people that have half million dollar IRAs. So, I don't know how big your IRA is and whether this is something you can do or not, but you got to look into that and see what the size is to decide what you want to do about that.

Dr. Jim Dahle:
But if it's a big one, you can look into isolating the basis and rolling it back into a 401(k) if she's eligible for one or just dealing with it. You can just live with an IRA and keep track of the basis in there indefinitely going forward. And when you pull that money out later, the basis comes out tax free. So, it's not illegal to be prorated, it's just a paperwork pain and it eliminates what you were trying to accomplish.

Dr. Jim Dahle:
Incidentally, I hear this all the time, people talk about IRAs and I'm not sure what the right way to say that is. I've always said IRA for Individual Retirement Arrangement, but I do hear people calling them IRAs from time to time. So, if anybody has a definitive source on how you're supposed to say IRA, send that in and we'll put it on the podcast. You can send that to [email protected].

Dr. Jim Dahle:
All right, our next question off the Speak Pipe comes from Ann who has some questions about student loans.

Ann:
My daughter will be in med school, actually she started med school in July of 2022 and it's borrowing about $70,000 worth of loans. What is the best approach for a medical school student loan from year one to year four and how she can plan on refinancing it or start saving to pay it back starting from year one of med school? Any advice will help. Thank you.

Dr. Jim Dahle:
Okay, the best approach is to be born into a wealthy family that just has money coming out of their ears and can pay for your med school. That's the best approach. Not take out any student loans. The best student loan is the one you never took out.

Dr. Jim Dahle:
I'm presuming that is not an option for your daughter. And so, she's going to be borrowing for her education like about three quarters of medical students. About three quarters of medical students have student loans of some amount. And the goal during med school is just to keep that down as much as you can.

Dr. Jim Dahle:
The average if you look at the exit surveys for MD students is about $205,000. It's about $255,000 for DO students. But that's average. Half of people have more and it's not unusual at all for people to finish with $300,000, $400,000, $500,000 and that continues to grow during residency, fellowship, etc.

Dr. Jim Dahle:
The best approach. As a general rule, people take out federal loans first. And the reason why is because they qualify for income-driven repayment programs. They qualify for public service loan forgiveness down the road. If you have to borrow money, you first max out your federal amount and then if you need more than that, you have to take out private student loans.

Dr. Jim Dahle:
You can't do a lot about them during med school. They just kind of sit there and gain interest unless you're lucky enough to be in med school during a student loan holiday, like those who have been in there the last few years.

Dr. Jim Dahle:
But once you get out of med school, you can start doing something about it. Your private student loans should be refinanced right away. You can get payments through some of the people on our website. If you go to the recommended tab at whitecoatinvestor.com and you go down to Student Loan Refinancing, you can see all the best companies to refinance your student loans with.

Dr. Jim Dahle:
But there are a couple that will give you $100 a month payments. So you should refinance your private student loans as soon as you get out of med school. There's no point in paying 7%, 8%, 9% if you could be paying 5% and still only have to deal with $100 a month payments.

Dr. Jim Dahle:
For federal loans what most people do during residency and fellowship is put them into an income driven repayment program. And these things are always changing. Every few years a new one comes out and they're talking about a new one coming out later this year. But for most students the right answer is the revised pay as you earn program.

Dr. Jim Dahle:
So you put your money in that and then you only have to make payments during residency or fellowship in accordance with your income. Low income, low payments. And in fact, if you file taxes as an MS4 with showing zero income, you usually have $0 payments during that interim year. And so, take advantage of that.

Dr. Jim Dahle:
If you're really going for public service loan forgiveness, there's a little trick you can do where you consolidate your loans, not refinance them, but consolidate them right when you come out of medical school. And that helps you skip the six month grace period. You don't want to skip it when you're going for public service loan forgiveness. You want as many of your 10 years’ worth of payments to be made at $0 or something close to that because that helps you end up with more forgiven. And so, that's one little trick that some people do when they're coming out of medical school.

Dr. Jim Dahle:
If you're in a complicated situation, if you're married to another earner, for instance, and maybe one of you is thinking about PSLF, you ought to consider paying for some advice from a student loan specialist such as studentloanadvice.com. And for a few hundred dollars you'll get the answers to the math what you should do, what program you should be in, how you should be saving for retirement during residency, how you should be filing your taxes to maximize that public service loan forgiveness.

Dr. Jim Dahle:
They'll do any sort of student loan questions you have, but those are the people who benefit the most, the ones with the really complicated student loan situations. So, check that out, studentloanadvice.com if you need more advice there.

Dr. Jim Dahle:
But in the situation of your daughter, the goal is just to keep the debt down as much as possible. Help her as much as you can. Encourage her to live frugally, get a roommate or if she has a partner, send the partner out to earn some of the living expenses and live like you're a broke medical student because you are. You're worse than broke.

Dr. Jim Dahle:
If broke is $0, by the time a med student comes out owing a couple hundred thousand, they're far, far worse than broke. So, I would encourage frugal living and smart student loan management. Good for thinking about this in the beginning. A lot of people don't think about it until the end.

Dr. Jim Dahle:
Speaking of medical students, I want to talk about an issue that just popped into my email box essentially this morning as I'm recording this on the 13th of March.

Dr. Jim Dahle:
Apparently 555 spots have gone unfilled in the match in emergency medicine. This is my specialty. It's traditionally been about moderately competitive. A typical match rate is about 93% of the students who want to match into emergency medicine get to match into emergency medicine. So, not terribly competitive, but certainly not anything like what we're seeing this year with 555 unfilled spots.

Dr. Jim Dahle:
Just to give you an idea of what's been happening in emergency medicine, they have been adding a bunch of programs in emergency medicine, particularly by for-profit contract management groups or hospital systems. And so, they kind of have a ready source of graduates to feed into their CMG or into their hospital system. And so, these positions have been increasing over the last few years. In 2015, there were 1,821 positions. In 2019 there were 2,488. That's an increase of 37% in just four years.

Dr. Jim Dahle:
And so, when people started seeing this and publishing papers on it, the message started getting out that there's going to be too many emergency medicine docs, you're not going to be able to get a job, etc.

Dr. Jim Dahle:
And so, what happens when medical students hear that? Well, people that are on the fence start going, “Well, maybe I'll go do that other specialty I was interested in” and they don't apply in emergency medicine. And you end up with a situation like the match this year where they're 555 unfilled spots.

Dr. Jim Dahle:
Now I have no doubt those spots are going to be filled in the soap in the scramble. There are just way too many people that aren't matching that maybe didn't even consider emergency medicine as being a possibility for them. Well, they're going to be trying to scramble into those 555 spots. They're all going to be filled, I'm sure.

Dr. Jim Dahle:
But it is a shot across the bow of what happens when you add too many spots in any given specialty or when you start talking about the future of a specialty being terrible, well, you're going to scare away some medical students. So be aware of that. Whether that's your goal or whether that's not your goal, there are consequences to publishing a bunch of articles with titles such as “Are there too many emergency physicians?” like ran in emergency medicine news in 2019.

Dr. Jim Dahle:
All right, let's take another question off the Speak Pipe. This one is about public service loan forgiveness.

Speaker 4:
Hey Jim, I had a question about public service loan forgiveness. I'm in my first year out of training working at an academic center and was planning to try and get my loans forgiven. I have one of those weird schedules where I work seven days on and then have 14 days off although I'm considered full-time.

Speaker 4:
I know in order to qualify for forgiveness, you have to be working at a not-for-profit center and be working full-time, or at least 30 hours a week, whichever is greater or so it says. I guess I was a little worried that I wouldn't qualify because if you average my hours together, I don't actually work above 30 hours per week even though my institution does consider me a full-time employee. Any comment on this would be much appreciated. Thanks.

Dr. Jim Dahle:
Okay, good question. One I've heard a number of times in the past. This is an issue with emergency docs a lot as well, but here's the deal. Go to the PSLF form and if you Google “PSLF form”, you'll get there within a few clicks. And scroll down to section three. This is the employer information to be completed by the borrower or employer it says.

Dr. Jim Dahle:
Wow, that's kind of cool to be completed by the borrower. That's ideal, right? It's best if you filled the form out, then you got to put whatever you want on it. Apparently that's okay. And then apparently section four is where the employer actually has to certify that what was put in section three is true.

Dr. Jim Dahle:
So, here's the deal. If you go to section three, you scroll down to number seven, it says employment status. There are two boxes. One is full-time, one is part-time. If you consider yourself full-time and the employer considers yourself full-time, I would suggest checking the full-time box. And then nobody at PSLF, the Department of Education is going to really question that if that box is checked and your employer signs it.

Dr. Jim Dahle:
Now, when you look at the instructions for the form, the employer scrolls down to that, they will see… Let me find it here. If you scroll down, and I'm now on page five of six of this form in the right side, the right column on this page, it says “Employment eligibility.” And if you scroll down there, it says you must be employed full-time by your employer. Generally you must meet your employer's definition of full-time. However for PSLF purposes, that definition must be at least an annual average of 30 hours per week.

Dr. Jim Dahle:
Then it says, if you're a teacher in another position under contract for at least eight out of 12 months, you meet the full-time standard if you work an average of at least 30 hours per week during the contractual period and receive credit by your employer for a full year's worth of employment. Vacation or leave time provided by the employer, leave taken for a condition that is a qualifying reason for leave is equivalent to hours worked in qualifying employment.

Dr. Jim Dahle:
So, it says 30 hours, but it sounds to me like there's a heck of a lot of gray there. And when the expectation in your field is like that of teachers so that you work eight or nine months a year, I think that's okay.

Dr. Jim Dahle:
The other way you can look at it is you can say, “Well, I was on leave for 25 weeks a year” and then all those hours count as well. So there's no way if I was doing the equivalent of full-time work, which if you're doing seven on seven off as a hospitalist or an intensivist or something, you are, there's no way I would not check full-time because I think you are working full-time and you ought to check that and I think your employer ought to sign off on it despite the 30 hours per week thing.

Dr. Jim Dahle:
Here's the other deal. If you actually add everything in, you add in your CME time, you add in the time you stay late after your shift or come in early, or you spend time on committees or doing paperwork or dealing with licensure or board certification, you get a whole bunch more hours that you're probably not thinking of as your work hours and you throw those in with your regular work hours and 10 days of holidays a year and four weeks of leave a year, you're going to be over 30 hours.

Dr. Jim Dahle:
I think you're okay to go ahead and check that full-time box. This is not something I spend a lot of time worrying about unless your employer was fighting you on it. But if I were you, I'd fill out section three for your employer's convenience and put that paper in front of them and have them sign it in section four.

Dr. Jim Dahle:
Now, if you're only working part-time, if you're doing what I'm doing six shifts a month, don't cheat on it and go tell them you're working full-time. That's not full-time. But if you're working 15 eights a month as an emergency doc, that's full-time and you ought to check the full-time box.

Dr. Jim Dahle:
Well, I hope you've enjoyed this episode. It was brought to you by Laurel Road for Doctors. Laurel Road is committed to serving the financial needs of doctors, including helping you get the home of your dreams. Laurel Road's Physician Mortgage is a home loan exclusively for physicians and dentists featuring up to 100% financing on loans of a million dollars or less.

Dr. Jim Dahle:
These loans have fewer restrictions than conventional mortgages, and recognize the lender's trust in medical professionals credit worthiness and earning potential. Borrowers can also get up to $650 off closing costs.

Dr. Jim Dahle:
For terms and conditions, please visit www.laurelroad.com/wci. Laurel Road is a brand of KeyBank N.A. and an equal housing lender, NMLS #399797.

Dr. Jim Dahle:
Don't forget you can get CFE on sale this week. That's Continuing Financial Education. It's our online course. You can stream it in your car. Don't watch the video while you're driving, but you can listen to the audio. And that's on sale for basically about 10% off. It's $699. It's normally $789. It qualifies for CME. Check that out, whitecoatinvestor.com/cfe2023.

Dr. Jim Dahle:
Thanks to those of you leaving us a five star review and telling your friends about the podcast. This most recent one, and my staff tells me I actually have to read it, comes in from Vivian, who apparently used a little bit of help from ChatGPT in writing this review.

Dr. Jim Dahle:
She writes, “Hark! A tale I bring to thee, of a podcast most fair, 'tis called the White Coat Investor, and its fame doth compare. With Dr. Dahle as the host, a scholar of great note, he speaks of finance and life, with wisdom as his coat.

Dr. Jim Dahle:
He shows the path to wealth, with nary a care, and guides us to success, though life may bring despair. With his counsel and direction, we shall not stray and our financial future shall be bright as the day.

Dr. Jim Dahle:
He saves our lives, with each word that he utters and teaches us how our financial future to nurture. His lessons are priceless, beyond all measure and his contributions to the white coat community, a treasure.

Dr. Jim Dahle:
So here's a review, with five stars aglow, for the White Coat Investor, its praises I do show. With Dr. Dahle's teachings and life-saving advice, 'tis the best investment, in the realm of financial vice.”

Dr. Jim Dahle:
All right, you can put whatever you want on your five star reviews. As long as it's five stars, it's going to help us get the word out there. So, thanks for your kind words, Vivian. That's great.

Dr. Jim Dahle:
For the rest of you, keep your head up, shoulders back. You've got this and we can help. See you next time on the White Coat Investor podcast.

Disclaimer:
The hosts of the White Coat Investor podcast are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.