Get answers about locum tenens tax prep. Here are tips for filing your 2023 taxes and optimizing your savings in 2024!

<p>
The freedom, flexibility and ease of the locum tenens lifestyle does come with a bit of 
additional work at tax time. While preparing for taxes can seem complex as a locum tenens 
provider, it’s not as challenging as you might expect, especially after the first time. 
If you’re new to locum tenens or have questions about tax preparation, we’ve got answers 
to your most asked questions, complete with helpful links direct to the IRS). 
</p>
<p>(Remember: Each individual’s situation is different, and tax laws are continually 
    evolving, so always consult the <a href="https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center" target="_blank">IRS</a>, 
    your <a href="https://www.irs.gov/businesses/small-businesses-self-employed/state-government-websites" target="_blank">state laws</a>, 
    and your tax professional).
</p>
<h2>Should I hire a tax professional to prepare my locum tenens taxes?</h2>
<p>Before diving into any other questions, we should address the most critical issue 
    of all – whether you should hire an accountant, CPA, attorney or other tax preparer. 
    YES! You should hire a tax professional to prepare your taxes as a locum tenens. 
    Avoid the temptation to figure it out on your own (you’ve got other ways to spend 
    your time). The information we’ve provided here is designed to give you an overview 
    and helpful links to IRS resources, but an experienced tax professional will be 
    able to get a complete view of your situation, save you money, and make your 
    life much easier!
</p>

<h2>Where can I find a tax professional to prepare my locum tenens taxes?</h2>
<p>To find a tax professional who is on record with the IRS, visit the 
    <a href="https://irs.treasury.gov/rpo/rpo.jsf" target="_blank">IRS Directory 
    of Federal Tax Return Preparers with Credentials and Select Qualifications.</a> 
    Here, you can search by zip code for attorneys, CPAs, enrolled agents, and 
    others who hold a professional credential or have filed an annual filing season 
    program record of completion with the IRS. You will want to find a professional 
    who is familiar not only with federal tax law but also with tax laws for your 
    state. You may want to ask other locum tenens colleagues for recommendations of 
    tax pros who have experience with locums.

</p>

<h2>Am I considered self-employed as a locum tenens provider?</h2>
<p>Most locum tenens professionals are considered self-employed. Here’s what the 
    <a href="https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center" target="_blank">
    IRS Self-Employed Individuals Tax Center</a> 
    says about it:</p> 

<p>“Generally, you are self-employed if any of the following apply to you:</p>
<ul>
    <li> You carry on a trade or business as a <a href="https://www.irs.gov/businesses/small-businesses-self-employed/sole-proprietorships" target="_blank">sole proprietor</a> 
    or an <a href="https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined" target="_blank">independent contractor.</a>
    </li>
	<li> You are a member of a <a href="https://www.irs.gov/businesses/partnerships" target="_blank">partnership</a> 
    that carries on a <a href="https://www.irs.gov/businesses/small-businesses-self-employed/business-activities" target="_blank">trade or business</a>.
    </li>
	<li> You are otherwise in business for yourself (including in a <a href="https://www.irs.gov/businesses/small-businesses-self-employed/business-activities" target="_blank">part-time business</a> 
    or as a <a href="https://www.irs.gov/businesses/gig-economy-tax-center" target="_blank">gig worker</a>).” </li>
</ul>

<h2>Is a locum tenens provider a 1099 independent contractor or W-2 employee?</h2>
<p>Most locum tenens providers are considered 1099 <a href="https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-defined" target="_blank">independent contractors</a> 
and not <a href="https://www.irs.gov/forms-pubs/about-form-w-2" target="_blank">W-2 employees.</a> 
But some may also be W-2 employees if they work for a company and take locum jobs 
on the side. Independent contractors pay self-employment tax, but W-2 employees who also 
work locums may ask their employers to 
<a href="https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes" target="_blank">withhold additional tax</a> 
on their behalf.
</p>

<h2>When should I receive my 1099s as a locum tenens contractor?</h2>
<p>The IRS requires all businesses that paid independent contractors $600 or 
    more to send <a href="https://www.irs.gov/forms-pubs/about-form-1099-nec" target="_blank">Form 1099-NEC</a> 
    (Nonemployee Compensation) by January 31. 
    You may receive yours electronically or via snail mail. If you do not 
    receive your 1099s, contact the organization to have it resent. Even if 
    you do not receive 1099s, you must still report all income on your tax 
    return. 
</p>

<h2>Do locum tenens need to pay quarterly taxes?</h2>
<p>Yes. As a self-employed locum tenens provider, you’ll generally need to 
    pay quarterly taxes (Remember, if you have a salaried position with an employer, 
    you may opt to have income tax withheld that covers your tax requirements). 
    For those who must pay quarterly taxes, you’ll need to consult with your 
    tax professional to determine what you’ll owe and avoid penalties. Visit 
    the <a href="https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes" target="_blank">IRS Estimated Taxes</a> 
    resource for complete information.
</p>

<h2>How do I pay quarterly taxes as a locum tenens provider?</h2>
<p>The IRS divides the year into four estimated payment periods with specific due dates: </p>
<p>“Estimated tax payments are due as follows:</p>
<ul>
    <li> January 1 to March 31 – April 15 </li>
    <li> April 1 to May 31 – June 15 </li>
    <li> June 1 to August 31 - September 15 </li>
    <li> September 1 to December 31 – January 15 of the following year” (<a href="#" target="_blank">
        IRS, Pay as You Go</a>) </li>
</ul>

<h2>What about state taxes as a locum tenens provider?</h2>
<p>If you work in multiple states as a locum tenens provider, you’ll need to establish 
    a “tax home” or a “domicile state.” Some states (Alaska, Florida, Nevada, New 
    Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming in 2023) 
    do not levy state income taxes. Others have various requirements for 
    self-employed individuals, including quarterly estimated taxes. This is 
    another vital reason to hire a tax professional.
</p>

<h2>What business-related expenses can I deduct as a locum tenens provider?</h2>
<p>If you work for an agency or directly for a hospital, many of your travel expenses 
    will be paid or reimbursed and, therefore, are not deductible. However, you may 
    be able to deduct some or all of the following <strong>non-reimbursed expenses</strong> 
    (talk with a professional, of course, and refer to the 
    <a href="https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center" target="_blank">IRS Tax Center 
    info on deductions</a>):
</p>

<ul>
    <li> Board exam fees </li>
   <li> Cell phone, computer, and tablet expenses (the portion you use for work) </li>
   <li> Continuing medical education costs </li>
   <li> Health insurance payments (if you pay for your own coverage and it’s not provided/available from an employer or spouse’s employer) </li>
   <li> Home office area used only for business purposes regularly (portion of your rent or mortgage) 
       (<a href="https://www.irs.gov/credits-deductions/individuals/home-office-deduction-at-a-glance" target="_blank">IRS Home Office Deduction at a Glance</a>) 
    </li>
   <li> Home office equipment and supplies used only for locum tenens work (like a desk, printer, paper) </li>
   <li> Licensing fees </li>
   <li> Lodging </li>
   <li> 50% of meal costs related to locum tenens work (<a href="https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses-2" target="_blank">IRS Business Travel Meals</a>) 
   </li>
   <li> Scrubs, stethoscopes, white coats, etc. </li>
   <li> Travel between your home and temporary work site, between work sites, or 
       to and from conferences and job interviews (<a href="https://www.irs.gov/forms-pubs/about-publication-463" target="_blank">IRS Publication 463</a>) 
       (<a href="https://www.irs.gov/taxtopics/tc511" target="_blank">IRS Topic 511</a>) </li>
</ul>

<h2>What kind of retirement accounts should I consider as locum tenens provider?</h2>
<p>A tax professional, accountant or financial advisor can help you choose the best 
    retirement plan for you. Just as W-2 employees have options, as a 1099 independent 
    contractor, you’ve got plenty of choices to build your nest egg on a tax-deferred 
    basis. 
</p>

<ul>
    <li> <a href="https://www.irs.gov/retirement-plans/defined-benefit-plan" target="_blank">Defined benefit plan</a> </li>
    <li> <a href="https://www.irs.gov/retirement-plans/roth-iras" target="_blank">Roth IRA</a> </li>
    <li> <a href="https://www.irs.gov/retirement-plans/plan-sponsor/simplified-employee-pension-plan-sep" target="_blank">SEP IRA</a> </li>
    <li> <a href="https://www.irs.gov/retirement-plans/plan-sponsor/simple-ira-plan" target="_blank">SIMPLE IRA</a> </li>
    <li> <a href="https://www.irs.gov/retirement-plans/one-participant-401k-plans" target="_blank">Solo 401k</a> </li>
    <li> <a href="https://www.irs.gov/retirement-plans/traditional-iras" target="_blank">Traditional IRA</a> </li>
</ul>

<h2>How can health savings accounts benefit locum tenens providers?</h2>
<p> If you have a high-deductible health plan (HDHP), you can contribute to a health 
    savings account (HSA). It lets you set aside funds on a pre-tax basis to cover 
    medical expenses like deductibles, copays, coinsurance and other costs. To learn 
    more about how HSAs can help you save money, visit <a href="https://www.healthcare.gov/glossary/health-savings-account-hsa/" target="_blank">HealthCare.gov</a> 
    and <a href="https://www.irs.gov/publications/p969" target="_blank">IRS Publication 969</a>.
</p>

<h2>Do I need to set up a business structure like an LLC or S-corp, or if I am a locum tenens provider?</h2>
<p>
    Instead of being a sole proprietor, you may choose to set up a business structure 
    like an LLC or an S-Corp. This can be complicated and depends on your individual 
    situation and your state, so consult an accountant, attorney or financial advisor 
    to see what makes most sense.
</p>

<h2>What is QBI, and how does that impact me as a locum tenens provider?</h2>
<p> The Qualified Business Income (QBI) deduction was created by the Tax Cuts and Jobs 
    Act of 2017 and is slated to sunset after 2025. It allows some self-employed 
    individuals with pass-through entities (LLCs, partnerships, S-corps or sole 
    proprietorships) to deduct up to 20% of their self-employment income. Taxable 
    income has to be under a certain limit, so you must consult with a tax professional 
    and see the <a href="https://www.irs.gov/newsroom/qualified-business-income-deduction" target="_blank">
    IRS Qualified Business Income Deduction resource</a> to see if you qualify.
</p>

<h2>How can I plan for next year’s taxes as a locum tenens provider?</h2>
<p> While it may sound overwhelming to navigate tax prep for locum tenens for the very 
    first time, with these tips and the help of a tax professional, it will be much 
    easier (and well worth it for the trade-off of being self-employed).
</p>

<p>To ensure you’re prepared for next year, take time to:</p>
<ul>
    <li> Set up an expense spreadsheet or use a program like Quicken, Freshbooks, Mint, etc. </li>
    <li> Create a separate savings account and put aside 35-40% of what you earn each paycheck. Use this to pay your quarterly taxes and set aside money for retirement. </li>
    <li> Keep all of your receipts and expense records. </li>
    <li> Set up any tax-advantaged accounts you’re not already using (IRAs, HSAs, etc.) </li>
    <li> Find a tax professional you trust  </li>
</ul>
<p> Ready to embark on your next great adventure as a locums? <strong>Browse our</strong> 
    <a href="https://www.crosscountry.com/locums" target="_blank">locum tenens opportunities</a> 
    <strong>now</strong>.

</p>


2024 Tax Guide for Locum Tenens Providers