Taxes are confusing, and no one likes doing them — including locum tenens physicians. While locum tenens positions are great for expanding your career, networking, and improving compensation, the reality is that as an independent contractor, your tax returns will look different than they would as an employee.
If this intimidates you, we’ve discovered some easy ways to manage your tax deductions as a locum tenens physician. In this guide we will give you tips for organizing and managing your deductions at tax time.
Table of Contents
- Locum Tenens Physicians Are Independent Contractors
- 9 Locum Tenens Physician Tax Deductions
- Tips for Managing Locum Tenens Physician Tax Deductions
- Trusted Locum Staffing: Your Personalized Team of Dedicated Locum Tenens Experts
Locum Tenens Physicians Are Independent Contractors
Most physicians are employees at a hospital or other medical facility. When a physician transitions to a locum tenens position, they are no longer considered an employee but an independent contractor. What does that mean?
An independent contractor is different, tax-wise, from an employee. A locum tenens physician is responsible for their tax deductions, as well as reporting their income to the IRS. That may sound intimidating, but it is very manageable.
Here are four things to consider when filing taxes as a locum tenens physician:
- Multiple States = More Paperwork: One of the major benefits of locum tenens positions is the ability to travel around the county. Unfortunately, working in multiple states requires taxes to be paid in every state. This can be confusing come tax time.
- Tax documents: Most employed physicians get a W-2 to file their taxes. However, because locum tenens physicians are considered independent contractors, they get a 1099 form instead.
- Tax reporting: Independent contractors are responsible for reporting their taxable income, unlike employees who pay taxes directly from their paychecks.
- Quarterly IRS payments: As an independent contractor, a locum tenens physician is responsible for reporting their income and paying taxes to the IRS quarterly.
- Tax deductions: Locum tenens physicians’ tax deductions are everywhere if you know where to look! More on this later.
All of this can be a lot to consider at tax time. If you are worried about handling locum tenens physician tax deductions and other paperwork, there is a solution!
Trusted Locum Staffing offers all sorts of benefits to locum tenens physicians, including assistance with organizing tax paperwork and even state licensing! Check out their benefits page to learn more.
9 Locum Tenens Physician Tax Deductions
If you are a locum tenens physician, you are probably wondering what expenses you can write off on your taxes. Here are a few examples of locum tenens physician tax deductions.
#1: Home Office
Most people don’t associate physicians with a home office, but the reality is that many physicians do a lot of work at home. From filling out paperwork to continuing medical education, home offices are common for locum tenens physicians. They are also tax deductible!
If you use a home office for your work, it could count as a locum tenens physician tax deduction. Home office deductions include a portion of your rent or mortgage, utilities such as internet, and any other home expenses like buying specialty medical software programs for your computer. Check out the IRS’s website to learn more about home office deductions.
#2: Business Travel
Did you know that driving to and from your locum tenens physician job is tax deductible? It falls under the umbrella of business travel, so keeping track of your mileage is a great way to take advantage of this locum tenens physician tax deduction. In some cases, the cost of the car, gas, and insurance are also deductible!
#3: Meals
Everybody’s needs to eat, and when you’re a locum tenens physician traveling for work, cooking at home is usually not an option.
Did you know that the meals you buy while working a locum tenens physician job are tax deductible? This can be especially useful for locum tenens physicians who use meal delivery services, which are notoriously expensive.
#4: Health Insurance
Locum tenens physicians are considered independent contractors, and because of that, they rarely get employee-sponsored healthcare. There are many other ways locum tenens physicians can get healthcare, including the marketplace. Locum tenens physicians have to pay the premiums of this health insurance out of pocket, and those premiums are tax deductible.
Worried about losing your health insurance when becoming a locum tenens physician? Trusted Locum Staffing offers a full medical, dental, and mental health insurance package, rivaling that of top employers. This is in addition to other services Trusted Locum Staffing offers, like top-notch housing and concierge services!
#5: Continuing Medical Education (CME)
Continuing medical education (CME) is an important and mandatory part of being a physician. To keep their licenses current, all physicians have to complete a certain amount of CME a year, depending upon their licensure and the state(s) in which they practice.
Not only is CME a lot of work, but it is also a financial strain. As any licensed physician will tell you, medical education does not come cheap. Luckily, continued medical education is a great locum tenens physician tax deduction, so you are likely able to write off the expense of this continued education in your taxes. If you aren’t sure if your CME is tax deductible, check with a CPA.
#6: Uniforms and Equipment
One of the easiest and best deductions for locum tenens physicians is the purchase of things they need to do their jobs, such as:
- Clothes, scrubs, shoes, white coat, and other PPE
- Gadgets, such as tablets and laptops needed for work
- Medical equipment, like a new stethoscope
All these things are tax deductible if they are purchased to be used during your locum tenens assignment.
#7: Housing
Locum tenens physician jobs are often called “traveling” jobs because they require the physician to move to the job opening for a temporary period, often staying in hotels or short-term rentals.
Most locum tenens assignments pay for your lodging as part of the overall compensation, and most consider it a huge perk of the job. Many locum tenens physicians get to stay in amazing places for free. However, if you have any non-covered hotel expenses during your locum tenens position, they are tax deductible. So don’t hold back on the mini-bar!
#8: Phone
Everyone loves their smartphones, but locum tenens physicians technically need theirs for work. A phone is crucial to communicating with healthcare facilities and other doctors on the job, which is why a phone and carrier plan are all tax deductible for locum tenens physicians!
#9: Additional Deductions
The locum tenens physician tax deductions don’t stop there! Here are just a few more things that can be written off on your taxes:
- Office supplies like paper, ink, printers, RX pads, etc.
- Additional licensing or fingerprint services
- Professional fees
- Malpractice insurance if purchasing your own
- Disability insurance if purchasing your own
- Retirement plan contributions
- Healthcare expenses with limits (ask your tax professional about this, as healthcare expenses are only deductible if they exceed a certain percentage of your income.)
This is far from a comprehensive list. The best way to ensure you get every deductible possible is to work with a qualified CPA to learn more about what you could write off, and keep all of your receipts for tax time.
Tips for Managing Locum Tenens Physician Tax Deductions
Now that you have a good idea of what you can write off as a locum tenens physician, here are some tips for managing your deductions and other tax paperwork so you can be ready when you consult your accountant or other tax professional.
Keep Track of Expenses
While writing off expenses is a great way to recoup money during tax time, it is important to note that the onus is on the physician to keep track of their expenses. All relevant receipts and documents should be organized, otherwise you risk losing money. Here are a few tips to help you keep your receipts organized:
- Physical receipt organizers: If you are low-tech, there is nothing wrong with using an old-fashioned binder or file cabinet to keep your receipts in. Just be sure to keep it in a place that is easily accessible.
- Digital organization: Digitally collecting your receipts is common practice, but it is no replacement for good organization skills. Be sure to carefully label all of your receipt files to ensure you can find what you need when tax time arrives. Keep separate folders for things like meal expenses, travel expenses, or equipment receipts, and be sure to organize by time.
- Organize, organize, organize: It doesn’t matter how you store your receipts if you cannot find them when you need them. Take the time to create a system of organization and stick to it. you’ll be glad you did when you get your expenses reimbursed!
Create a Budget for Taxes and Save
A locum tenens physician must self-report their income and pay their taxes quarterly, so it is important to get a good idea of how much you will need to pay ahead of time. A little bit of proactive work can save a lot of headaches or a large bill from the IRS down the road.
Take the time to guess how much you may owe in taxes and place it in a second bank account, somewhere it can sit until you need it. If you end up owing less than what you saved in taxes, this extra money can be a windfall, and if you owe money, you will be glad you had it.
When in doubt, reach out to a CPA who works with physicians and understands the nuances of taxing locum tenens income. In addition to helping you figure out how much you owe both federally and in any states you worked in, a CPA will also be able to help you get the most deductions possible.
Trusted Locum Staffing: Your Personalized Team of Dedicated Locum Tenens Experts
As a locum tenens physician, you are focused on your patients and ensuring they have everything they need. Let Trusted Locum Staffing help you take some of the stress off of managing your career with our amazing benefits and services.
Trusted Locum Staffing can not only help you find the perfect locum tenens staffing solutions, but we also offer an amazing benefits package and perks like while-glove concierge service and access to top-notch housing. Trusted Locum Staffing even covers medical malpractice insurance as well as disability insurance. You focus on being the best locum tenens physician you can be and let Trusted Locum Staffing do the rest!