Locum tenens work comes with many advantages: an abundant job market, higher pay, a flexible schedule, and more. However, since as a locum tenens physician you’re categorized as an independent contractor, it also comes with some responsibility to file taxes independently vs. having your employer calculate your employment tax for you.
Many locum providers feel overwhelmed with figuring out what exactly is deductible from their travel, housing, and health expenses come tax season. That’s why Barton Associates annually partners with tax advisor Andrew Schwartz, CPA, who has been providing tax and financial planning services to healthcare professionals since 1993.
In our 2022 Tax Webinar, Andrew answered many questions surrounding paying taxes as a locum and which expenses count as ordinary and necessary deductions within providers’ unique situations this tax season. Without further ado, here are 6 things you didn’t know you can deduct from your 2022 income taxes as a locum tenens provider with insights from tax preparer Andrew Schwartz!
While many clients cover the cost of lodging for their locum providers, this isn’t the case for every assignment. If you find yourself covering the cost for your own apartment housing on assignment, you have the tax benefit of deducting the expense of your rent if:
“You rent the apartment near where you are working, the apartment is outside the general vicinity of where you live, and the rent paid appears to be Ordinary and Necessary.”
In other words, just don’t go renting a penthouse too far away!
Many locum tenens providers prefer the option of telehealth as they are able to treat patients in any part of the country from the comfort of their own home. Since you’re saving on the cost of travel, unfortunately, you can’t deduct travel expenses. But you can save on the at-home space you’ve designated for work — after all, setting up that home office probably wasn’t free!
“Deductions are based on the square footage of the part of your home you use regularly and exclusively for business expenses versus the total square footage of your home. If you use the Simplified Home Office method, you can write off the square footage of your home office, up to 300 feet, times $5 per foot.”
As they say, the bigger the better!
Convenient Transportation Services
If you booked an assignment without rental car coverage, unless the facility was within walking distance, you probably used a transportation service like Uber or Lyft to get around. While convenient, those expenses can add up.
“As long as they are paid in connection with your locum tenens assignment, and you are working outside of the general vicinity where you live, Uber and Lyft expenses are deductible.”
It’s not uncommon for locum tenens providers to simply bring their lodging with them on assignments! Travel vans and RV’s are a great way to skip the hassle of coordinating travel and lodging reimbursements with an agency, as it wraps both expenses into one. But living this type of nomadic lifestyle may come with hefty loan payments. While you can’t deduct your monthly payments in full, you can still get a partial deduction:
“You would depreciate the vehicle based on its cost, including the loan you take. You can then write off the interest portion of the loan.”
Unless you meal prepped enough to cover meals for your entire assignment before you left home, you’re likely going to be eating out quite a bit. Most locum providers already know that food expenses on assignment are tax deductible, but did you know that you can factor in tips as well?
“As a locum tenens provider, the meal plus reasonable tips would be included in your food expenses.”
Turns out, tipping your server pays off!
Family Health Insurance
As a locum provider yourself, you are eligible to deduct your health insurance expenses, including Medicare premiums (if applicable), and dental insurance. However, if both yourself and your spouse are filing as independent contractors, you can not only file a deduction for your spouse’s insurance, but for your dependents as well!
Barton Associates aims to equip locum tenens providers with all the tools necessary to make tax time easy.