Frequently Asked Questions

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    General Locum Tenens 1099 Questions


  • How do taxes work if I’m permanently employed but work locum tenens part time? E.g. I worked at a permanent position for Q1 & Q2, but worked locum tenens for Q4. Would I submit 15.3% of just the Q4 earnings?

    • The 15.3% tax rate is just for the self-employment taxes - the Social Security and Medicare taxes owed on that income. You still need to pay your federal taxes owed on that income too. You can pay your estimated taxes based on the amount you earn each quarter. Q1 is for income earned through 3/31, Q2 is through 5/31, Q3 is through 9/30 and Q4 is for the rest of the year. If you do pay your quarterly estimates based on when the income is earned, make sure to attach a Form 2210 to “annualize your income” and show the income earned per quarter.

  • How would you handle adjusting withholdings on W4s for a married couple of physicians who have similar income where one is an independent contractor, and the other is a W2 employee with 2 jobs?

      • For the one with 2 jobs, claim Married on the job that pays more and Single with no allowances on the other one. Depending on how much the person earns who is self-employed, you probably should be paying quarterly estimates too. We recommend paying estimates on www.irs.gov using the Make a Payment link (Payments | Internal Revenue Service (irs.gov))

  • When do I need to start filing quarterly estimated taxes as a locum tenens provider?

      • You need to pay estimates if you won’t meet any of the exceptions to avoid an underpayment penalty. The best way to avoid being penalized is to pay 90% of the current year’s tax or 100% (110% if income over $150k) of your prior year’s taxes. Estimated taxes generally need to be made evenly over the year unless the income isn’t earned evenly over the year; in that case, you would complete and attach a Form 2210 to your personal tax return to annualize your income and show the IRS how much income you earned each quarter.

  • How does section 179 apply to independent contractors?

      • Section 179 means you write off the full cost of an asset in one year versus writing off the cost over 5 or 7 years.

  • Is there a minimum income for section 179 to be applicable?

      • For an individual, the maximum 179 deduction you can claim is a combination of your Schedule C income (before claiming the 179 deduction) plus the taxable wages earned by you and your spouse.

  • What are the dates for quarterly taxes?

      • For 2022, first-quarter payments are due April 18, second-quarter payments are June 15, third-quarter payments are due Sept.15, and fourth-quarter payments are due Jan.18, 2023.

  • Can we pay all quarterly taxes in Jan 2022 for all of 2021 to avoid the 2% penalty?

      • If you earned all the money after 8/31/21. Otherwise, if you don’t meet the safe-harbor exception, paying a big Q4 payment will reduce your underpayment penalty but won’t eliminate it.

  • How are state-level taxes calculated if you work in multiple states as a locum tenens provider?

    • You first pay taxes to the state where you work based on the income earned in that state. You then calculate taxes on that income in the state where you live, and take a credit against that tax for the taxes paid to the state where you work. There is no double taxation but you are taxed at the higher of the rates between where you work and where you live.

  • If you work out of your home as a locum, for instance, telehealth, what percentage of your home can you deduct?

      • It’s based on the square footage of the part of your home you use regularly and exclusively for business 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.

  • What is the best way to easily calculate SEP IRA? Gross 1099 income or adjusted 1099 income (expenses loss)?

      • It’s based on your net self-employment income, so 1099 less expenses less 50% of the self-employment taxes.

  • As a locum provider, I am part of a single-member PLLC that is paid for my locum work. Beyond the hourly rate, I receive $200 per diem plus reimbursement for actual mileage at the IRS rate. Should I charge actual expenses on a dedicated credit car, or have my PLLC reimburse me at the standard IRS per diem?

      • For your auto expenses, you can choose the standard mileage rates or choose to use actual expenses incurred which includes gas, repairs, insurance, parking at home, and lease payments if you lease your vehicle or factor for depreciation if you own it.

    QBI as a Locum Tenens Provider


  • Does QBI come first, then the 15% for self employee taxes?

      • A self-employed person can deduct half of the self-employment taxes paid, which are the Social Security and Medicare taxes owed. An employee has 7.65% of their salary withheld for these taxes, and then the employer matches those taxes. A self-employed person pays both halves, or 15.3%, on their income. When calculating the QBI deduction, you deduct 50% of the self-employment taxes against your net locum tenens income to come up with the income eligible for the QBI deduction. If you contribute to a retirement plan, you would deduct that before calculating the QBI deduction as well.

  • Is QBI an automatic 20% deduction if you’re married and filing jointly? Is this based on income levels?

      • The QBI deduction is equal to 20% of your net business income, which is your Schedule C income less 50% of the self-employment taxes, self-employed health insurance premiums paid, and the retirement plan contributions for the year.

    Locum Tenens Healthcare Questions


  • Are Medicare premiums deductible like health insurance?

    • Yes.

  • Can you deduct Cobra health insurance payments?

      • In theory no, but if that’s the most cost effective way for you to purchase health insurance for yourself and your family, then you can use that as the rationale to claim those premiums for the self-employed health insurance deduction.

  • If my spouse has access to health insurance through their employer, can I deduct my health insurance? Are my premiums on their health insurance deductible for the 1099 spouse?

      • If you can be covered on your spouse’s plan, you wouldn’t be eligible to claim premiums paid personally. However, if you are on your spouse’s plan, the money they pay toward the premiums should be paid with pre-tax dollars through their employee benefits.

  • Both spouses are 1099 workers. Can the locum tenens provider deduct their spouses health insurance too, or just their health insurance? What about dependents?

      • Yes, the premiums paid for both spouses and dependents should count.

  • Does dental insurance and expenses count as a deduction?

    • Yes.

  • What part of your income needs to be 1099 in order to deduct health insurance? E.g. You do 1099 work a few hours a month

      • You can only deduct the premiums up to the net self-employment you report. The deciding factor isn’t the time you spend, but the income you earn.

  • Is health insurance available as a military retiree tax deductible?

    • Money spent on Tricare premiums wouldn’t count.

    Travel Deductions as a Locum Tenens Provider


  • Can you deduct flights purchased with frequent flyer points/miles?

      • No, since there is no cost toward those flights, you cannot claim a deduction.

  • Can you deduct Lyft or Uber?

    • Yes, as long as they are paid in connection with your temporary job assignment, and you are working outside of the general vicinity where you live.

  • If one uses a rental car for locum work, can standard mileage be used along with expense for gas?

      • Rental cars would be based on actual expenses incurred. Leased vehicles can use the standard mileage rates so long as you use the standard mileage rates each year, and don’t ever use actual expenses for that leased vehicle.

  • If I use a travel van (>GVW 10,000 LBS) as my residence while on assignment, is the monthly payment cost of the van able to be expensed?

      • 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. Principal payments aren’t deductible since you write off what you purchase with the loan.

  • If I used my automobiles to make house calls for my locum tenens assignment, can I deduct that?

      • Yes, that would be both an ordinary and necessary expense. You can claim the expense using the standard mileage rates or on actual expenses incurred multiplied by the business use percentage.

  • When Barton Associates reimburses for mileage and lodging for a locum assignment, will that show as income on my 1099?

      • If they do add those reimbursement to your 1099, you need to write those expenses off on your Schedule C so you are only taxed on the income you actually earned.

  • If you choose the standard government rate deduction for miles driven, can you deduct gas to the location also?

      • No, if you use the standard mileage rates you wouldn’t add any other automobile related costs including gas, repairs, insurance and parking at home.

  • Can you deduct a private plane the same way as an automobile?

      • Yes, if the costs incurred would be considered ordinary and necessary in connection with generating your Locum Tenens income.

    Locum Tenens Food Expense Deductions


  • Can you do a combination of per diem rate deductions and receipts-based deductions for meals?

      • For each temporary job assignment, you would use either the Per Diem rates or actual costs incurred for the entire trip. You can use different methods for different assignments, but need to be consistent for each assignment.

  • Are meals reimbursed only for days worked or also weekends and holidays if still on location?

      • They are allowable for each day that you are outside of the general vicinity of where you live in connection with a temporary job assignment.

  • Are tips tax deductible when you are out to eat while on a locum tenens assignment?

    • As a locum tenens provider, the meal plus reasonable tips would be included in your food expenses.

  • Can you deduct grocery store food that you purchase to make your meals during a business trip?

      • Yes, unless you are basing your deduction on the Per Diem rates.

  • How do taxes work for expenses that I charge on my credit card and am reimbursed for afterwards?

      • Anything that is reimbursed isn’t taxable. However, if those reimbursed expenses are included on your 1099, you need to claim an expense for Reimbursed Expenses Included on 1099 so you are only taxed on the income you earn.

  • As a per diem employee, are my travel and lodging expenses deductible?

      • If you travel outside the general vicinity of where you live and the expenses are Ordinary and Necessary for you to earn that income.

  • Are travel, lodging, and meals deductible if a 1099 locum is only checking out a new site or interviewing?

      • Yes, if that is the primary reason you went on the trip. If you take a trip and happen to visit a location for a little while, that won’t meet the threshold to make the whole trip deductible.

  • If I rent an apartment, and that cost is not reimbursed, can the rent be deducted?

      • If you rent the apartment near where you are working, and the apartment is outside the general vicinity of where you live, and the rent paid appears to be Ordinary and Necessary.

  • The locum company only reimbursed me part of the travel cost to my assignment. Can I deduct the remaining cost?

    • Yes.

  • If I travel with my family for my locum tenens assignment, can I deduct their expenses for travel?

      • No, you can only generally deduct your own costs.

  • How much can I deduct for my RV if I use it as housing during a locum assignment?

      • This is something that a tax professional would need to review. While an RV is similar to an automobile, it can also be used as housing. The question to ask your tax professional would be whether it is more advantageous to claim it as a vehicle or your residence.

    Educational Tax Deductions as a Locum Tenens Provider


  • Are the dues for professional organizations, such as ACEP, deductible?

      • Yes, unless they state a portion is used for lobbying and not deductible. In that case, the remaining cost would be deductible.

  • Can a practicing locum tenens physician (MD) deduct the cost to get an MPH while doing locum work?

      • Yes, we’ve had a lot of clients claim that education deduction over the years.

  • Can you deduct the fee for the first time you take a board exam or only when it is for recertification?

    • Initial licensing that qualifies you to work in your trade or business isn’t supposed to be deductible.

    Saving for Retirement as a Locum


  • What retirement plans are available for a 1099 contractor if you also have a 401K through another employer?

      • The common ones are SEPs, SIMPLES, and Solo 401ks. With a SEP, you can put away 20% of your net self-employment income or 25% of wages paid if you pay yourself a salary through an S-Corp. Simples are $14k ($17k if 50 or older) plus 3% of self-employment income. Solo 401ks are $20.5k ($27k if 50 or older) plus the amount you would be able to add to a SEP.

  • What is the cutoff date to contribute to a retirement account for 2021?

      • SEPS can be set up as late as the due date to file your tax return, including extensions.

  • Can I start a SEP-IRA if I’m drawing from Medicare and still working?

      • Yes, you sure can.

  • Does an IRA make sense for 1099 contractors at all ages?

      • There is no longer an age limit to be able to contribute to an IRA in years you have earned income. The amount you can contribute is the lesser of your earned income or $7k ($6k if under 50). And your spouse can contribute too if you have sufficient earned income.

  • Are Savings Bonds a good plan for retirement?

      • Depending on our age, probably not. They are very conservative. The longer your retirement money stays invested, the more you should be able to tolerate the ups and downs of the stock market. If you are a very conservative investor, then maybe they make sense.

    FSA and HSA as a Locum


  • How do you know if you qualify to contribute to HSA and FSA?

      • Flexible Spending Accounts are offered by an employer and you would sign up during open enrollment each year. For an H.S.A. you would need to ask the insurance company if the health insurance plan is a qualifying high deductible health insurance plan that allows for a H.S.A.

  • If I have a DB plan, do I still qualify for an HSA?

      • Yes, as long as you have a qualifying high deductible health insurance plan.

  • Can I contribute to an HSA and/or a 401K from my previous employer?

      • No you can’t. But you can set up your own Health Savings Account and Retirement Account at any of the financial institutions including Vanguard, Fidelity and Schwab.

  • Which company do you recommend for setting up an HSA?

      • Vanguard seems to be the most cost effective option, but you need to do your research and see which one works for you.

  • Is it too late to set up and fund an HSA for 2021?

      • No, you have until 4/15/22 to set up and fund an HSA for 2021.

  • Can you save receipts from years of health related expenses and then submit the receipts a decade later and take money out?

    • Yes.

  • Can I contribute to HSA from a previous employer?

      • Yes.

    S-Corporations/Creating an LLC as a 1099 Contractor


  • What is the deadline to open an S-Corp for the 2021 tax year?

      • It’s based on when the entity is set up. If you don’t have an entity set up, it’s too late.

  • What are the benefits of creating an LLC as a 1099 locum tenens contractor?

      • For tax purposes, a Single Member LLC that does not elect to be treated as an S-Corp (we don’t generally recommend this election for locums), the LLC is a disregarded entity for tax purposes. So it isn’t relevant to your taxes. Please reach out to an attorney to discuss how much legal liability protection an LLC would offer.

  • What are the benefits of creating an S-Corp as a 1099 contractor?

      • For Locums, the headaches of setting up an S-Corp would exceed any benefits. With an S-Corp, you need to pay yourself a reasonable salary. If you work in multiple states, you would need to withhold income taxes and pay unemployment taxes for each state where you work. Plus, the S-Corp would need to apportion it’s net income based on the income earned and wage paid in each state.

  • As an S-Corp, do you manually withdraw from your account, or do you have to have an accountant set up payroll?

      • The rules require that you pay yourself a reasonable salary from the S-Corp. Any additional profits can be taken out as S-Corp distributions.

  • If you incorporate midyear as a locum tenens 1099 contractor, how does the tax situation change?

      • This is a tricky question, mostly because it is usually not recommended to incorporate mid-year. There are many pros and cons to incorporation so please review that section of the locum tenens FAQ or contact your locum tenens tax professional before taking that step.

  • Is there a list of every expense and percentages of a total income for each category that we can write off as an independent contractor or S-Corp owner?

  • Where is the best place to find a locum tenens tax professional?

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