Locum Tenens Tax Guide 2024

Navigating the tax landscape as a locum tenens provider can be complex, but understanding your tax obligations and maximizing deductions is essential for financial success. As an independent contractor, you’re responsible for managing self-employment taxes, tracking business expenses, and planning for quarterly tax payments.

Obligations as a Locum Tenens Provider

As a 1099 locum tenens provider, understanding your tax obligations is critical to staying compliant and maximizing your income. Unlike traditional employees, independent contractors are responsible for paying self-employment tax, which covers Social Security and Medicare at a rate of 15.3%. Fortunately, half of this amount is deductible on your 1040 form. Additionally, because taxes aren’t withheld, you must make quarterly estimated tax payments to the IRS and relevant state tax agencies to avoid penalties. For those working in multiple states, filing state income tax returns becomes an added responsibility, as each state has unique tax laws. We’re here to help you navigate these requirements and streamline your financial management.

Locum Tenens Tax Deductions Explained

Sure, taxes aren’t anyone’s favorite topic, but understanding them now can save you from some unpleasant surprises later. No one wants to be the person rushing to file or realizing they owe more than expected.

• Self-Employment Tax: You’re responsible for both the employer and employee portions of Social Security and Medicare taxes, totaling 15.3%. However, you can deduct half of this amount on your personal tax return.

• Quarterly Estimated Taxes: Required to prevent penalties, these must be filed with both the IRS and any relevant state tax agencies.

• State Income Taxes: If you work in multiple states, you may need to file state income tax returns for each one, depending on their tax regulations

Please consult with your tax advisor or visit the IRS website for the most up-to-date tax information.

Key Deductions for Locum Tenens Providers

One of the advantages of being a 1099 contractor is the ability to claim numerous deductions, which can significantly reduce your taxable income. Here are the most common:

• Travel and Lodging: Work-related travel expenses, including flights, car rentals, lodging, and meals, can be deductible if your assignment qualifies as “temporary” under IRS guidelines.

• Malpractice Insurance: Deduct premiums for professional liability insurance. To learn more about malpractice and the types of coverage offered, check out our malpractice guide.

• Licensing Fees: State licensing, DEA registration, and certification fees are deductible.

• Continuing Medical Education (CME): Deductions for course expenses, materials, and associated travel costs.

• Uniforms and Equipment: Necessary medical supplies, scrubs, and other work-related items.

Imagine this: You just wrapped up a locum assignment in a scenic destination, and not only did you make a difference in a new community, but you also get to deduct your travel expenses. That’s a win-win in anyone’s book.

TIPS for Locum Tenens Professionals

Managing your finances as a locum tenens provider doesn’t have to be stressful if you stay organized and plan ahead. Start by keeping your business and personal finances separate—open a bank account and credit card just for work expenses to make things easier to track. Use tools like QuickBooks or Expensify to help you stay on top of your income and expenses. Be sure to keep detailed records of everything, including income, travel, lodging, and other deductible costs. And don’t forget to set aside part of each paycheck for taxes so you’re prepared for quarterly payments and year-end bills.

End-of-Year Checklist

• Organize 1099 Forms: Ensure you have all 1099-MISC or 1099-NEC forms.

• Review Business Expenses: Check for any overlooked deductible expenses.

• Calculate Home Office Deduction: If applicable, calculate the eligible portion of rent, utilities, and other home expenses.

• File on Time: April 15 is typically the filing deadline, with an extension available until October 15 using IRS Form 4868.

The Benefits of Being an Independent Contractor

One of the key advantages of working as a locum tenens provider in an independent contractor capacity is the autonomy it affords. According to a recent study, this autonomy allows locum tenens physicians to hold a unique position within facilities, which can lead to improvements in everyday practices. This dynamic means that because locum tenens physicians operate independently, they’re in a stronger position to voice concerns, suggest improvements, and advocate for better practices without the constraints that traditional employment might impose.

Another big advantage is the flexibility—you get to pick your schedule, where you work, and how long your assignments last, making it easier to balance work and life. These jobs also tend to pay better, so you can earn more while gaining valuable experience. Plus, you’ll get to work in different healthcare settings and with a variety of patient populations, which is great for building your skills and your resume. And if you love to travel, locum tenens jobs give you the chance to explore new places and experience different cultures.

Common Locum Tenens Tax Mistakes

Here are some pitfalls to avoid as a locum tenens provider:

• Missing Quarterly Payments: Failing to file can lead to penalties.

• Misclassifying Travel: Ensure deductions meet IRS guidelines.

• Overlooking State Taxes: If you work across multiple states, stay on top of state tax filing requirements.

Independent contractor Opportunities

At Astrya Global, we’re committed to empowering our locum tenens professionals to make informed decisions about their careers. Our experienced team provides guidance on career opportunities in the medical industry. Whether you’re new to locum tenens work or a seasoned provider, we’re here to support your success.

Follow us on LinkedIn for more tips on managing your locum tenens career, or contact our team for assistance with job placements, and employm guidance.

Disclaimer: This tax guide is provided for informational purposes only and is not intended as legal, tax, or financial advice. Astrya Global Medical Staffing does not provide tax or legal services. We recommend consulting with a qualified tax advisor, accountant, or attorney to address your specific tax situation, especially as it pertains to locum tenens assignments. Tax laws are subject to change, and individual circumstances may vary.