Ah, tax season.
It elicits groans from all of us every year, but most of us only have to deal with a W-2. As a locum tenens physician, you will have filled out a 1099 form with any agency with which you’ve worked over the past year.
That can make filing locum tenens taxes a little trickier. But not to fear – take a deep breath and follow these simple steps.
#1 Plan ahead. Keep in mind that you’re not paying federal, state and self-employment taxes throughout the year, so set aside roughly 40% of your income to pay on April 15. You can also submit quarterly estimates to the IRS to minimize your year-end payment.
#2 Save your receipts! Locum tenens work gives you freedom from the overhead of a traditional business. You’re your own boss, which means you can write off most of your travel- and work-related expenses since there are fewer restrictions for deductions. Examples include:
- Housing, travel and meals not covered by your agency.
- Continuing education and licenses.
- Scrubs and white coats.
- Equipment such as your laptop.
- Anything that is ordinary or necessary for your work.
Hopefully you’ve been saving these all along. Which brings us to…
#3 Find a trustworthy accountant. According to Physicians Practice, a CPA who you can call on throughout the year for support is a must for every physician.
NerdWallet provides great tips for finding the right tax preparer:
- Require your preparer to have a Preparer Tax Identification Number.
- Make sure they are a certified public accountant, licensed attorney or enrolled agent.
- Look for membership to the National Association of Tax Professionals.
- Ensure they will be available after tax season to take your calls or represent you in front of the IRS if the need arises.
#4 Remember to save. It’s important to plan for your retirement, by choosing an IRA or SEP account. A Simplified Employee Pension account helps those who are self-employed provide retirement benefits to themselves. You can read more about them here.
This article is intended to provide general tax information. For tax advice related to your specific needs, please consult a tax preparer in your area.