Tax Facts for Locum Tenens Professionals
With tax season approaching, preparing yourself financially for the year to come is crucial to your career success — and that’s especially true if you work locum tenens assignments.
While the rewards and freedoms of working locum tenens are many, you also have the responsibility of ensuring that you are compliant with the requirements of the Internal Revenue Service (IRS). Here are some tips to help you survive the upcoming tax season and to prepare you for the year to come.
Locum Tenens Taxes: Working as an Independent Contractor
As a locum tenens physician, you are working as an independent contractor, not as an employee. For tax purposes, you are considered a self-employed individual and different tax laws will apply to you as compared to a full-time permanent physician at a hospital or facility. There are both advantages and disadvantages to filing as an independent contractor. Some important things to remember are:
Self-employment tax. As a self-employed individual, you are responsible for paying all of your self-employment tax (comprised predominantly of Social Security and Medicare taxes). The self-employment tax rate is usually about 15 percent (that’s in addition to federal and state employment taxes).
Installment payments. Taxes are not withheld from your checks. You will ordinarily pay your estimated tax directly to the IRS in four installments, starting on April 15.
Additional fax forms. You may be responsible for completing Schedule C or Schedule C-EZ, Schedule SE, and Form 1040-ES, which pertain to self employment. These forms, as well as additional tax information, can be obtained online from the IRS website at www.irs.gov.
State taxes. You may also be responsible for any taxes applicable to the state in which you worked on the income generated during that period.
Deductions. To help offset the self-employment tax, independent contractors have the opportunity to claim many work-related expenses as deductions that would not be available to full-time employees. These deductions can include:
- Travel expenses
- Meal per-diems
- Business-related cell phone usage
- Computer/electronics purchases
- Health insurance premiums
- Bank and credit card fees associated with your temporary contract work
- Home office expenses associated with work-related administrative tasks
You must be able to account for the time, place, full cost, and business purpose of each deduction. Also, deductions may not be claimed for personal, living, or family expenses.
Be sure to consult a financial professional during the tax preparation process to find out which of these items apply to your situation, and to discover what deductions are available to you.
Taxes for Locum Tenens Professionals: Staying Organized
A good organizational system is imperative to successfully navigating the IRS’ many rules and regulations. Maintaining thorough records of your work assignments, pay checks, anticipated deductions, and changes in tax laws is crucial. Remember to seek assistance from a qualified accounting professional when necessary. Many accounting firms specialize in services for healthcare professionals, especially travelers.
Working locum tenens contracts offers many benefits, but also many responsibilities. Locum Leaders, a charter member of NALTO, can help you navigate the intricacies of working as a locum tenens physician. To get started, connect with a recruiter today.
This article does not constitute official financial, insurance or legal advice on the part of Locum Leaders. A financial professional should be consulted at all times for issues of taxation and finances. Locum Leaders is not directly affiliated with any of the websites discussed in this article and cannot be held liable for any information received from these third-party sources.
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