With tax season fast approaching, this is a great time for locum providers to get organized. Here are our top tips for how to prepare for tax season.
1. Understand Your Tax Filing Status
As 1099 independent contractors, locum physicians and advanced practice providers are responsible for paying the full amount of your own Social Security and Medicare taxes (collectively known as self-employment tax).
In addition, you must pay your own federal income taxes and generally make quarterly estimated tax payments. Depending on the state in which you live or earn income, you may also be required to file and pay state income taxes, as state tax obligations vary by jurisdiction.
Unlike W2 employees, your taxes don’t come right out of your paycheck –– which means you have to do a little bit more planning around tax season. While this makes tax season complicated, with the right support, it doesn’t have to be stressful.
2. Trust a Professional
The best way to truly get ahead on your taxes? Hire a professional tax accountant.
You might be tempted to save on expenses by filing your own taxes, but a professional can save you time, money, and headaches in the long run.
Your best bet is to look for a tax accountant with experience in healthcare. If you’re not sure where to begin, ask your colleagues! Especially ones with experience working locums—they are your best resource to find someone who can speak to your specific tax needs. But don’t wait too long: tax experts get busy during this time of year, and their schedules fill up fast.
3. Maximize Deductions
The good news is that locum tenens physicians and advanced practice providers are eligible to deduct all work-related expenses from their taxes. These might include:
- Travel expenses that haven’t already been reimbursed;
- Licensing fees and board exam fees;
- Cell phone bills;
- Home office equipment (if it’s related to your locums work);
- Health insurance payments (if you pay for your own)
Your accountant can help you sort through which deductions you’re eligible for––in some cases, you might even be able to deduct your accountant fees as a business expense.
4. Leave a Paper Trail
It is important to monitor your income and expenses throughout the year. This allows you to maximize your deductions and avoid errors that might cost you.
We recommend using a digitizing app to keep track of your receipts, and a trusty spreadsheet to organize your expenses. This will make it easier for your accountant to get you the best possible deduction, and help make your tax season as stress-free as possible.
