As independent contractors, most locum tenens doctors must report earnings using a 1099-MISC form. Luckily, being an independent contractor gives you the opportunity to shelter some of your earnings from taxes through the following methods.
Work-Related Expenses
Many locum tenens physicians aren’t aware that they can deduct for many of their business expenses. It is important to keep careful records so you can deduct appropriately. This may include:
- Baggage fees
- Cell phone and internet bill
- Dry cleaning
- Educational fees
- Equipment and supplies
- Licensing and board exam fees
- Meals
- Parking and tolls
- Scrubs and lab coats
- Healthcare premiums
- Other items related to your locum tenens job
Refer to the IRS website for details about what deductions you can make and any applicable limits.
Retirement Plans
Don’t miss out on this huge tax deduction! Maxing out your retirement account options not only helps you save for later, but can give you valuable tax benefits. A tax-deferred retirement plan allows you to put away money that will not be taxed this year, avoiding both state and local income taxes and helping to save on your tax bill.
So what type of plan should you have? A 401k, a SEP, or an IRA? Something else? As a locum tenens doctor, it depends on your situation, so your CPA can help you determine which one is best for your income and retirement goals. On that note, an experienced accountant can help you save on your taxes as well!
Healthcare Expenses
Another way to save money on your taxes is by going out and getting an HSA account. There are many to choose from on the marketplace, so shopping around will help you find the one that makes the most sense for your needs. The savings come into play when you contribute to your HSA account. You are able to lower your taxable income because the contributions are taken out of your income pre-tax. These often come paired with high deductible plans, so it may not be the right solution for everyone, but it is a good strategy for many.
Giving Gives Back
Donations to qualified charities are important deductions. If you donate items, keep an itemized list of the donation so you can calculate the value. Many people do not bother to itemize what they give to a local charity, but this is a missed opportunity for a tax deduction – and every little bit helps. Your mileage to and from the charity may also be eligible, as well as other expenses associated with giving your time. You can get more details from the IRS website.
Ready to get started?
There are many ways for a savvy independent contractor to do locum tenens work and come out ahead. If you’re ready to get started on your next locum tenens job with MPLT Healthcare, give us a call at 1.866.346.6758 or apply today.
Disclaimer: This page is for informational purposes only and is not intended to take the place of advice from a professional financial advisor. We recommend consulting a licensed CPA for tax consultation and other financial advisement.
