Tax Considerations for Locum Tenens Healthcare Professionals

Are you a healthcare professional being approached by locum tenens recruiters? These opportunities often promise benefits like flexible schedules, higher hourly rates, and greater autonomy. While these can be appealing, it’s important to weigh the potential downsides, especially when it comes to taxes. Here are seven key considerations to help you make informed decisions before saying yes to locum tenens work.

7 Tax and Financial Considerations for Locum Tenens Professionals:

1. What 1099 Status Means for You
   • As a locum tenens professional, you’ll likely work as a 1099 independent contractor, meaning you’re responsible for managing your own taxes rather than having them withheld by an employer.
   • This shift offers more freedom but requires careful financial planning.
2. Self-Employment Tax
   • You’re responsible for paying the full Social Security and Medicare taxes, which add up to 15.3% in addition to your income tax.
   • Be prepared to set aside funds for quarterly tax payments to avoid surprises.
3. The True Cost of Independence
   • Beyond self-employment taxes, you’ll need to budget for expenses like liability insurance, health benefits, and retirement savings—costs typically covered by an employer.
   • These additional responsibilities can significantly reduce your take-home income. Need help understanding your taxes as a self-employed person, contact the best small business tax accountant. 
4. Tax Deductions to Reduce Your Burden
   • As an independent contractor, you can deduct business expenses like travel, medical supplies, and professional development.
   • Keeping detailed records of these expenses is essential for accurate filings and maximizing deductions.
5. Filing as a Business Entity
   • Forming an LLC or S-Corp might offer tax benefits and financial protection based on your income.
   • Need assistance in setting up a business entity for healthcare 1099 professionals? Consult a tax professional at Accolade Accounting to determine the best structure for your situation.
6. Understanding Form 1099-NEC
   • Companies that pay you $600 or more are required to issue a Form 1099-NEC, which reports your income to the IRS.
   • Make sure to track all payments and expenses carefully to stay organized and prepared for tax season.
7. Dual Employment Scenarios
   • If you’re combining locum tenens work with a traditional W-2 role, your tax situation may become more complex.
   • Professional guidance can help you navigate these dual statuses effectively, look for the best small business tax accountant near me.

Final Thoughts

Locum tenens work offers exciting opportunities, but it comes with added responsibilities. By understanding the financial and tax implications, you can make confident decisions and avoid unnecessary pitfalls. Take the time to plan, budget, and consult professionals where needed to set yourself up for success.