Tax Tips for New Locum Tenens Physicians
March 6th, 2012 1 Min readIf this is your first year doing locum tenens assignments and you have typically been an employed physician, you should be aware of the greater complexity resulting from your locum's independent contractor (IC) treatment. Although the advantages of IC treatment generally outweigh the disadvantages, you will be better served by seeking a qualified tax advisor.
As an IC, you will not have access to workers' compensation or unemployment insurance, at least on the compensation and services performed as an IC. Further, most locum tenens staffing companies will not provide health, disability and life insurance or other typical employee benefits. Accordingly, you will need to make your own provisions in these regards.
Since staffing agencies may not withhold income, Social Security, or Medicare taxes on your compensation, you will be required to make quarterly estimated tax payments unless you and/or your spouse have another source for adequate tax withholding.
However, there are meaningful advantages to IC status, including the ability to more readily claim unreimbursed expenses on your income tax returns and more lucrative retirement plan options. Further, if you anticipate working locum assignments more than just a year or two, there might be some added advantages to forming and working through a professional corporation. Finally, I can't overstate the importance of seeking professional tax advice; the assistance and tax savings will more than pay for their fees.
For more tax advice, check out our Career Coaching section on "Working as an Independent Contractor", which includes several additional resources and links. Find out more on the benefits of working locum tenens, and stay tuned for more tax advice as we approach April 15!