Moonlight without getting burned.
Moonlighting in residency: ACGME and program rules, J-1 and H-1B limits, W-2 vs 1099, self-employment tax, quarterly estimates and safe harbors, QBI, solo 401(k) vs SEP-IRA, malpractice, licensure and DEA.
Reviewed October 2026 · verify against current guidelines
Moonlighting · 1 of 6
Get permission first.
ACGME rules (effective July 1, 2026)
| Written permission | You need written permission from your program director to moonlight. You can never be required to moonlight. The program monitors how it affects your performance and can withdraw permission (Institutional Requirements 4.11.a). |
|---|---|
| Can be banned | Your sponsoring institution or program may prohibit moonlighting outright. |
| PGY-1 | PGY-1 residents may not moonlight (CPR 6.25.b). |
| 80 hours | Internal and external moonlighting hours count toward the 80-hour weekly limit, averaged over four weeks (CPR 6.20, 6.25.a). |
| Other hour rules | Per the ACGME FAQ, only the 80-hour limit applies to moonlighting hours. Moonlighting still must not interfere with your training goals or your fitness for work, or compromise patient safety (CPR 6.25). |
Before you take a shift
- Read your institution's moonlighting policy. Many add rules of their own, such as a minimum PGY level, good standing, annual re-approval, or no moonlighting on certain rotations.
- Get the approval in writing every academic year.
- Log every moonlighting hour in your duty-hour system.
- Fellows: check the fellowship Common Program Requirements and your specialty-specific requirements.
CPR ACGME Common Program RequirementsIR ACGME Institutional RequirementsInternal moonlighting at your program's own sitesExternal moonlighting anywhere else
Moonlighting · 2 of 6
Check your visa first.
Visa status
| J-1 (Intealth-sponsored) | Work outside your approved training program is not permitted, paid or unpaid. Since September 2025 there is one exception: supplemental clinical activity at your own training site. Your program director must approve it, and your Training Program Liaison must submit Intealth's attestation form before you start. It must meet ACGME requirements, so PGY-1s are excluded. It is site-specific, valid for one training year, and supervised. You can't bill independently or act as an attending, and work at other institutions is still prohibited. If it adds more than $3,000 a year to your pay, Intealth issues an amended DS-2019. |
|---|---|
| H-1B | Authorizes work only for the employer that petitioned for you, on that petition's terms. Each additional employer must file its own petition with USCIS (8 CFR 214.2(h)(2)(i)(C)). Typical external or 1099 moonlighting is generally off-limits without one. |
| Anything else | Check with your program and immigration counsel before you accept any shift. |
Status is at stake — Under 22 CFR 62.16, unauthorized employment violates J-1 program status and can end your program. Don't rely on what a staffing company tells you. Get written confirmation from your GME office.
TPL Training Program Liaison (your GME office's Intealth contact)USCIS U.S. Citizenship and Immigration Services
Moonlighting · 3 of 6
W-2 or 1099: know which.
Two ways to be paid
| W-2 employee | The employer withholds income tax and pays half of Social Security and Medicare. Unreimbursed work expenses are not deductible, a rule now permanent under the 2025 law. |
|---|---|
| 1099 contractor | Nothing is withheld. You pay income tax plus both halves of Social Security and Medicare (self-employment tax), make quarterly payments, and can deduct ordinary and necessary business expenses on Schedule C. |
Self-employment tax
The rate is 15.3%: 12.4% Social Security plus 2.9% Medicare. It applies to 92.35% of net self-employment earnings (Schedule SE). The Social Security part stops at the wage base, which is $184,500 for 2026 ($192,300 announced for 2027). Your W-2 wages count toward that cap first. Medicare has no cap. An extra 0.9% Medicare tax applies above $200,000 for single filers ($250,000 married filing jointly). Half of your SE tax is deductible in figuring AGI.
Example: $20,000 net 1099 profit on top of a resident W-2
| SE tax | $20,000 × 92.35% × 15.3% ≈ $2,826. |
|---|---|
| Deduction for half | About $1,413 off your AGI. |
| Income tax | Owed on top of that, at your marginal rate (12–22% for most single residents in 2026). The QBI deduction reduces it (section 4). |
| Set aside | SE tax works out to about 14% of profit (92.35% × 15.3%). Add your marginal income-tax rate, less the QBI deduction, and you get roughly a quarter to a third of each check. Refine the number with your actual return. |
SE tax self-employment taxSchedule C profit or loss from a sole proprietorship
Moonlighting · 4 of 6
Pay quarterly. Deduct right.
Estimated tax, 2026
| Who must pay | Anyone expecting to owe $1,000 or more after withholding and credits. |
|---|---|
| Safe harbor | Pay, through withholding plus estimates, the smaller of 90% of your 2026 tax or 100% of your 2025 tax. The 100% becomes 110% if your 2025 AGI was over $150,000 ($75,000 married filing separately). |
| Due dates | April 15, 2026; June 15, 2026; Sept 15, 2026; Jan 15, 2027. The next payment is due Jan 15, 2027. Underpayment penalties are figured separately for each installment, so a big payment late in the year doesn't erase an earlier shortfall. You can skip the January payment if you file by Feb 1, 2027 and pay the full balance. |
| Simplest fix | Raise the withholding on your residency W-4. Withholding counts toward the safe harbor. |
Common deductible 1099 expenses (if not reimbursed)
- Malpractice premiums you pay yourself.
- State license, DEA registration and credentialing fees tied to the moonlighting work.
- Business travel between job sites. Your commute from home doesn't count.
- Business portion of your phone, and any equipment you need for the work.
- Solo 401(k) or SEP contributions. These are taken on Form 1040, not Schedule C.
QBI deduction after the 2025 law
The 20% qualified business income deduction is now permanent. QBI is your business profit minus the deductible half of SE tax, self-employed health insurance and your retirement-plan contributions for that business. Starting in 2026 there is a $400 minimum deduction if you have at least $1,000 of QBI from an active business. Physician services are a specified service trade or business (field of health). That matters only above the threshold: in 2026, taxable income of $201,750 single or $403,500 married filing jointly. The deduction phases out completely at $276,750 single or $553,500 joint. Most residents are under the threshold, so moonlighting profit can qualify in full. W-2 wages never count as QBI.
Moonlighting · 5 of 6
Shelter the 1099 income.
Solo 401(k) vs SEP-IRA, 2026
| Solo 401(k): employee deferral | Up to 100% of earned income, but it shares the $24,500 402(g) limit with your residency 403(b) or 401(k). One limit per person, not per plan. |
|---|---|
| Solo 401(k): employer contribution | About 20% of net SE earnings after the half-SE-tax deduction (IRS Pub 560 rate table). On the $20,000 example, that is about $3,700. |
| SEP-IRA | Employer contributions only, at the same effective 20% for the self-employed, up to $72,000. No employee deferrals. |
| Total cap | $72,000 of annual additions. If your residency plan is a 403(b), it is combined with plans of businesses you control more than 50%, so your 403(b) and solo 401(k) share one $72,000 limit (IRS Pub 571). |
A SEP-IRA breaks the backdoor Roth — SEP-IRA balances count as traditional IRA money in the pro-rata calculation on Form 8606. If you do backdoor Roths, use a solo 401(k) for moonlighting income instead.
Practical order
- Max your residency match first.
- Then decide whether your remaining $24,500 deferral room goes in the 403(b) or the solo 401(k).
- Then add solo 401(k) employer contributions.
- PSLF-bound? Pre-tax contributions lower your AGI and your IDR payment.
Moonlighting · 6 of 6
Coverage, license, DEA.
Before the first shift
| Malpractice | Your residency coverage generally does not follow you to external moonlighting. Get the moonlighting employer's policy in writing: limits, occurrence vs claims-made, and who pays for the tail. Otherwise buy your own. For internal moonlighting, confirm with risk management that you're covered. |
|---|---|
| State license | External moonlighting usually requires a full, unrestricted license in the state where you work, because training licenses are generally limited to program duties. Requirements, including how many years of training you need, vary by state. Check the state medical board. |
| DEA | Under 21 CFR 1301.22(c), you can prescribe under your hospital's DEA number (with your suffix) only within the scope of your employment there. External moonlighting needs your own DEA registration in that state, plus a state controlled-substance registration where one is required. |
| Credentialing | Hospital privileges and payer enrollment for the moonlighting site can take weeks to months. Start early. |
| Board and NPI | Make sure your NPI record is current. Some sites also require board eligibility, ACLS/ATLS, or specific procedure logs. |
Fitness for work comes first — The rule that matters most is that moonlighting must not compromise patient safety. If a shift would leave you unsafe for your next residency day, decline it.
NPI National Provider IdentifierQBI qualified business income (§199A)SSTB specified service trade or businessAGI adjusted gross income
Educational reference only — not financial, tax or legal advice. Rules change; confirm with the official source, your plan documents, or a fee-only advisor.
Sources
Verify against current guidelines and local protocol before acting.
- ACGME Common Program Requirements (Residency), effective July 1, 2026: 6.20 (80-hour limit includes all moonlighting), 6.25, 6.25.a, 6.25.b, and FAQ on moonlighting hours.
- ACGME Institutional Requirements, effective July 1, 2026: 4.11.a.1–4.11.a.4 (moonlighting policy; written program director permission).
- Intealth (ECFMG) Exchange Visitor Sponsorship Program. Employment Outside of the Approved Training Program ("Moonlighting") memo, and Attestation of Supplemental Clinical Activity within the Training Institution with FAQs, both dated February 15, 2026. ecfmg.org/evsp; FAQ: activities must meet ACGME requirements (no PGY-1); amended DS-2019 if the activity adds more than $3,000 a year. ecfmg.org/evsp/supplemental-clinical-activity-attestation.pdf.
- 22 CFR 62.16 (J-1 employment; unauthorized employment violates program status), as cited in the Intealth memo.
- 8 CFR 214.2(h)(2)(i)(C)–(D): each employer of an H-1B worker must file a separate petition; a new employer must petition before employment changes. eCFR.
- Social Security Administration, Office of the Chief Actuary. Contribution and Benefit Base: $184,500 (2026); $192,300 (2027). ssa.gov/oact/cola/cbb.html.
- Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes); Schedule SE (Form 1040) (92.35% of net earnings); Additional Medicare Tax thresholds. irs.gov.
- Internal Revenue Service. Form 1040-ES (2026), Estimated Tax for Individuals: $1,000 threshold; 90%/100%/110% rules; 2026 due dates; QBI deduction made permanent.
- Internal Revenue Service. Rev. Proc. 2025-32 §4.26: 2026 §199A threshold amounts ($201,750; $403,500 joint) and phase-in ranges.
- Treas. Reg. §1.199A-5(b)(2)(ii): services in the field of health, including physicians, are a specified service trade or business.
- 26 U.S.C. 67, as amended by Pub. L. 119-21 §70110: miscellaneous itemized deductions (including unreimbursed employee expenses) disallowed for tax years beginning after 2017, now permanent.
- Internal Revenue Service. One-participant 401(k) plans; SEP contribution limits ($72,000 for 2026); Publication 560 (self-employed rate table: 25% plan rate equals 20%); Publication 571 (Rev. January 2026), 403(b) annual additions combined with plans of businesses you control more than 50%.
- Internal Revenue Service. Instructions for Form 8606: SEP IRAs count as traditional IRAs for the pro-rata calculation.
- 21 CFR 1301.22(c) (practitioners using a hospital's DEA registration only within the scope of their employment there) and 21 CFR 1301.12 (separate registrations by location and state). eCFR.
- Treas. Reg. §1.199A-3(b)(1)(vi): the deductible part of SE tax, self-employed health insurance and qualified retirement plan contributions reduce QBI.
- Internal Revenue Service. Instructions for Form 2210 (underpayment of estimated tax): the penalty is figured separately for each installment due date.