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How do locum tenens taxes work?
Taxes for locum tenens providers work differently depending on whether you’re a physician or an advanced practitioner. The business entity you’ve set up (if any) can also affect your tax responsibilities.
This introductory tax guide for locum tenens providers will prepare you for a productive conversation with a tax expert. If you’re a nurse practitioner or physician’s assistant looking for more information on locum tenens taxes, you can jump to our advanced practice section lower on the page.
Taxes for locum tenens physicians
Locum tenens physicians are independent contractors, which means they’re responsible for paying their own taxes. Unlike W-2 employees who have taxes withheld from each paycheck by their employer, 1099 contract employees must put aside a portion of their earnings to pay their taxes.
Estimated quarterly tax payments
As you work and earn throughout the year, the IRS wants you to make regular income tax payments, usually due on the 15th of April, June, September, and January. While these tax bills can cause some sticker shock, keep in mind that locums assignments generally pay doctors more than permanent roles.
Self-employment taxes and state taxes
Independent contractors must also pay self-employment taxes, which cover your share of Medicare and Social Security. The current self-employment tax rate from the IRS is set at 15.3% of your net income.
You’ll also need to pay state taxes in your home state, plus any states where you worked throughout the year. Each state has its own tax laws, so locums physicians who work in multiple locations should consult with an expert to make sure you fully understand your tax obligations.
Tax deductions for locum tenens physicians
As independent contractors, locum tenens physicians can deduct a variety of qualified work-related expenses. Be sure to keep detailed receipts for any deductions you plan to claim. Common tax deductions for locum tenens physicians include:
Retirement contributions
Health and dental insurance premiums
Health Savings Account (HSA) contributions
Home office expenses
Conference fees or continuing education courses
Work materials like scrubs, stethoscopes, and other supplies
Electronics like smartphones, tablets, or computers
Meals and other incidentals (for assignments under 1 year)
Other unreimbursed expenses like phone bills, vehicle mileage, parking, and tolls
Be diligent about collecting and organizing receipts for anything you plan to deduct from your taxes — the IRS will not accept credit card or bank statements. Your records should go back at least 3 years, though 7 years is even better.
Additional tax strategies for locums physicians
Aside from tax deductions for business expenses, locums physicians can also use other methods to lower their tax bill:
Income shifting: Certain business structures may allow you to “hire” your spouse or child to help with saving for retirement or for future education expenses.
Medical reimbursement plans (MERPs): These can make your business eligible to cover out-of-pocket medical expenses or insurance premiums.
Primary care preceptor initiatives: To help address the shortage of physicians, these incentivize current physicians to help train new PCPs.
Rural care tax credits: Rural areas often have severely limited access to care, and these encourage physicians to work where they’re needed most.
Whether you work locums full time or as an additional income stream, consult with a tax strategist or CPA to ensure you’re making the most of your status as an independent contractor. These documents can also be useful resources for preparing to meet with a tax professional.
California Withholding Discussion
Physician Travel Tax Issues
Contracting with Physician's Professional Corporation
Locum tenens taxes for advanced practice providers
Advanced practitioners working locum tenens with Weatherby Healthcare are W-2 employees, so taxes are automatically deducted from your paycheck like with most other jobs. However, you’ll still need to file state taxes in each state where you work an assignment.
While W-2 employees can’t claim all the same deductions as independent contractors, advanced practitioners working locums may still qualify for some tax advantages. These documents can help you determine your eligibility for tax breaks on travel expenses and learn more about your tax obligations in different states. They’re provided for informational purposes only — meeting with a tax expert is the surest way to get a solid grasp on your tax situation.
Choose a locums agency that puts providers first
Whether you’re interested in a full-time locums career or simply looking to supplement your income, a trusted staffing agency can be a valuable asset in accomplishing your goals.
When you work locums with Weatherby, you’ll connect with a personal consultant who learns all about your personal preferences and professional goals. They’ll deliver hand-picked assignments that match how, where, and when you like to work, and help you achieve a more fulfilling, flexible, and lucrative career.
Learn more about the benefits of working locum tenens, or explore our other helpful resources for healthcare providers.