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I need some saving/investment advice - kind of unique situation
Posted on 3/6/17 at 10:56 am
Posted on 3/6/17 at 10:56 am
Okay, so here's my situation.
I'll be finishing my residency in June. Where I will be working the local hospital has put together a recruitment package because of a need in the community. Very basically, the hospital will be providing an income guarantee for my first 2 years. We haven't finalized the numbers yet, but it will probably be around $20,000 a month.
The unique situation is that this money is not taxed. It is treated by the federal government as a loan. However, after a few years of practicing in the community the hospital "forgives" the loan. At this time I will be on the hook for the taxes.
My question here is what do y'all think is the best thing to do in the interim to put away money in anticipation of paying the taxes in the future. Obviously, I want something where the money will be safe but still doing some work.
I really appreciate any advice
I'll be finishing my residency in June. Where I will be working the local hospital has put together a recruitment package because of a need in the community. Very basically, the hospital will be providing an income guarantee for my first 2 years. We haven't finalized the numbers yet, but it will probably be around $20,000 a month.
The unique situation is that this money is not taxed. It is treated by the federal government as a loan. However, after a few years of practicing in the community the hospital "forgives" the loan. At this time I will be on the hook for the taxes.
My question here is what do y'all think is the best thing to do in the interim to put away money in anticipation of paying the taxes in the future. Obviously, I want something where the money will be safe but still doing some work.
I really appreciate any advice
6
Posted on 3/6/17 at 11:08 am to GEAUXT
This 240K is in addition to the salary you will be making? Or are they not paying you anything but loans? Or some mix?
What state will this be in?
What state will this be in?
Posted on 3/6/17 at 11:16 am to LSUFanHouston
quote:
This 240K is in addition to the salary you will be making? Or are they not paying you anything but loans? Or some mix?
It will be a mix. Basically, they guarantee that at the end of the month, after expenses, I make 20k. So as my patient base grows and revenue increases they'll be on the hook for less and less. At some point, they won't have to pay anything because I'll be making more than that (theoretically). So it's not like they'll give me a whole 480k over 2 years. If that makes sense.
It's in LA
Posted on 3/6/17 at 11:18 am to GEAUXT
The "loan" is forgiven over a couple of years after the guarantee period. It's usually like 4 years. So each year I'd have a 1/4 of the total I got from them as additional income.
Posted on 3/6/17 at 12:14 pm to GEAUXT
I would try a money board with more activity. Reddit and boggleheads come to mind, maybe YNAB but I don't post there. This is a pretty specialized question, and I am sure there are others with experience in this but maybe not a large enough user base here.
Posted on 3/6/17 at 12:16 pm to GEAUXT
With it being this short of a term, I'd personally put it in a savings account and just play it safe....but that may not be the best financial decision to maximize that potential
I'd contact a professional. And if you're not married and thinking about it, I'd definitely time it accordingly
quote:the number of years will determine if this deal (tax wise) is friendly to you or not.
The "loan" is forgiven over a couple of years after the guarantee period. It's usually like 4 years. So each year I'd have a 1/4 of the total I got from them as additional income.
I'd contact a professional. And if you're not married and thinking about it, I'd definitely time it accordingly
This post was edited on 3/6/17 at 12:22 pm
Posted on 3/6/17 at 12:23 pm to GEAUXT
Posted on 3/6/17 at 12:33 pm to GEAUXT
The investment answer is I probably would find some kind of a CD with a decent rate now AND a stepup feature. I could see interest rates going higher in the next 3-5 years... it's almost all but guaranteed. So you don't want to lock in an interest rate now.
Posted on 3/6/17 at 12:54 pm to GEAUXT
quote:
The unique situation is that this money is not taxed. It is treated by the federal government as a loan. However, after a few years of practicing in the community the hospital "forgives" the loan. At this time I will be on the hook for the taxes.
On the surface this seems like a pretty shitty ordeal for you. The loan forgiveness down the road will presumably be taxed at a higher tax bracket than what you would have paid had the money been paid to you as a traditional income in the first two years.
Posted on 3/6/17 at 1:13 pm to slackster
quote:
The loan forgiveness down the road will presumably be taxed at a higher tax bracket than what you would have paid had the money been paid to you as a traditional income in the first two years.
Yeah that's what I'm trying to crunch in the numbers. This type of arrangement is relatively common in the medical field. While I would prefer to just be a straight W2 employee at the hospital, I will be in private practice instead.
The "loan" is strictly a way to ensure that a practitioner has a certain guarantee of income while building up their practice. It would strictly supplement my actual income to certain level until I reach that on my own at which point the hospital would not be paying me anything.
It's attractive for me because both my wife and I are residents and we have a baby on the way. Having that guarantee will take a lot of stress off my shoulders.
Thanks to everyone for the advice so far
Posted on 3/6/17 at 1:28 pm to GEAUXT
I'd definitely find a CPA to help with this issue also.
Posted on 3/6/17 at 2:16 pm to GEAUXT
some sort of autodraft into an investment account ?
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