Tax season is here, and while it’s no one’s favorite time of year, we don’t want it to be daunting for locums providers.
Locums providers are 1099 employees, which means—unlike W-2 employees, whose taxes are remitted by their employer—they are responsible for remitting their own taxes. Filing your taxes as a 1099 employee can be a little more complicated, but given the right preparation, it doesn’t have to be stressful.
Below, we’ll provide you with tips and practices to make filing your taxes as stress-free as possible—and to help you plan for next year’s filing.
Trust a Professional
Our number one recommendation when it comes to filing your taxes: hire a professional tax expert. A good accountant can help you cover all your financial bases and get the best deductions possible. They can also help advise you throughout the year, so you’re not caught off guard when next tax season rolls around.
Specifically, look for accountants who have experience working with locums providers, or other 1099 employees. If you’ve taken locums assignments outside of your home state, it’s also a good idea to search for accountants that have knowledge in multi-state taxation.
If you’ve never hired an accountant before and don’t know where to start, ask your colleagues for recommendations—especially fellow locums physicians and advanced practitioners. They will be your best possible resource to find someone who can speak to your specific tax needs.
Most importantly, don’t wait until the last minute to start looking: tax professionals’ schedules fill up quickly at this time of year, so you’ll want to hire someone as soon as possible.
Pay your (Quarterly) Taxes
We get it: no one wants to think about taxes more than once a year. But quarterly tax payments will make filing your taxes at the end of the year go much more smoothly.
If you’re new to quarterly taxes, think of it this way: W-2 employees pay their taxes as they go, since they come out of each paycheck. Making quarterly tax payments as a 1099 employee is exactly the same concept. And it’s often mandatory for locums providers: if you owe $1,000 or more in taxes at the end of the year, the IRS may require you to make quarterly payments, especially if locums work makes up the bulk of your income.
If this is your first time making quarterly payments, don’t panic: your accountant can help you through the process. They can also work with you to figure out how much of your paycheck to set aside for your taxes, and provide you forms and schedules for your quarterly payments.
Track Your Expenses, and Save Your Receipts
No one can be expected to remember what they were doing in February of 2021 in March of 2022. So make it easier on yourself by tracking your expenses throughout the year.
We recommend keeping a spreadsheet, with tabs for each category of expense—charitable contributions, work-related expenses, etc—and updating it on a regular basis. And you’ve probably heard this before, but we’ll say it again: save your receipts! We recommend keeping them in a file folder, or better yet, scanning and saving digital copies of them, which you can do with a home scanner or by downloading one of the many mobile apps available to help with receipt tracking.
Here are some examples of work-related expenses you’ll want to keep track of:
- Unreimbursed travel expenses;
- Cell phone bills;
- Equipment for your home office;
- Licensing fees and board exam fees;
- Health insurance payments, if you’re paying for your own insurance;
- Certain meals, if they’re related to work and/or travel to and from your assignment;
- Unreimbursed mileage, both driving to and from your locums location, and to and from work each day—your maps app should be able to give you the exact mileage for each trip.
Bottom line: if it’s at all related to your job, save it, track it, and send it to your accountant. They’ll be able to use all of this information to get you the best possible deduction.
No one likes paying taxes. But using the tips above, you can make the process as stress-free as possible.