🩺 What Every Locum Should Know About Taxes

How independent physicians and clinicians can turn tax season into a savings opportunity.

Understanding the Locum Life

If you’re a locum tenens provider, you already know the perks: freedom, flexibility, and the ability to choose when and where you work. Whether you find assignments through LocumTenens.com, Hayes Locums, or Weatherby Healthcare, locum work lets you practice medicine on your own terms.

But there’s one area many locums overlook — taxes.

Most locums are paid as 1099 independent contractors, not W-2 employees. That means no automatic tax withholding and no employer-sponsored benefits — but it also means huge potential tax advantages if you plan correctly.

Why Locums Pay More (Unless They Plan Smarter)

When you’re paid as a 1099, you’re responsible for both the employer and employee portions of Social Security and Medicare — about 15.3% in self-employment tax.

But here’s the good news: you also qualify for business deductions and advanced retirement plans that W-2 employees can’t use.

Common deductible expenses include:

• 🧳 Travel and lodging to and from assignments
• 🩺 Medical licenses and CME courses
• 💻 Equipment, scrubs, and professional software
• 📞 Phone and internet used for work
• 🏠 Home office deductions (if you manage assignments from home)

These can quickly add up to thousands in deductions every year — money that stays in your pocket instead of going to the IRS.

The Retirement Deduction Most Locums Miss

Here’s where things get interesting. As a self-employed physician or clinician, you can contribute far more to retirement plans than most employees.

Depending on your income and setup:

• A SEP-IRA can allow you to contribute up to 25% of your net income (max $69,000 for 2024).
• A Solo 401(k) allows both employee and employer contributions, often letting you save even more.
• A Cash Balance Plan (a type of pension) can push that deduction into the six-figure range — even over $250,000 in some cases.

These aren’t just retirement tools — they’re tax-saving powerhouses.

Why a Tax Advisor Matters

Most general CPAs treat locums like regular employees. But you’re running a micro-practice, and your tax strategy should reflect that.

A specialized advisor can help you:

• Choose the right business structure (LLC vs. S-Corp)
• Maximize deductions unique to medical professionals
• Design a retirement plan that doubles as a tax strategy

Final Thought

Locum work gives you control over your schedule and your income. With the right tax strategy, it can also give you control over your wealth.

Before your next contract, ask yourself:

“Am I working for my taxes — or are my taxes working for me?”

💼 Talk to a tax advisor today at MyPensionTree.com and see how much you could save this year.