Working as a locum tenens provider offers incredible flexibility, independence, and the opportunity to explore different healthcare settings. However, it also comes with unique responsibilities, particularly when it comes to managing taxes. As a 1099 independent contractor, you’re responsible for handling your own tax obligations, which can be daunting if you’re unprepared. In this guide, we’ll break down the essentials to help you navigate taxes efficiently and avoid surprises come tax season.

What Does It Mean to Be a 1099 Independent Contractor?

When you work as a locum tenens professional, you’re often classified as a 1099 independent contractor rather than an employee. This means that your earnings aren’t subject to automatic tax withholdings like they would be in a traditional W-2 employment arrangement. Instead, you’re responsible for paying your federal, state, and local taxes, including self-employment taxes, on your own.

Key Tax Obligations for 1099 Contractors

Self-Employment Taxes

As a 1099 contractor, you’re required to pay self-employment taxes, which include both the employee and employer portions of Social Security and Medicare taxes. For 2025, this rate is 15.3% of your net earnings, though the Social Security portion has an income cap.

Estimated Quarterly Taxes

The IRS expects independent contractors to pay taxes quarterly instead of waiting until the annual tax deadline. You’ll need to estimate your income and pay taxes by the following dates:

  • April 15
  • June 15
  • September 15
  • January 15 (of the following year)

Failing to pay on time may result in penalties and interest.

Income Taxes

In addition to self-employment taxes, you’ll need to account for federal and state income taxes. The rate depends on your total income and where you practice, as tax rates vary by state.

Deductions

One of the advantages of being a 1099 contractor is that you can deduct business expenses, reducing your taxable income. Common deductions for locum tenens professionals include:

  • Travel expenses (airfare, car rentals, mileage)
  • Lodging and meals
  • Licensing fees and professional memberships
  • Continuing medical education (CME) expenses
  • Malpractice insurance

Tips for Managing Taxes as a Locum Tenens Provider

Track Your Income and Expenses

Maintain accurate records of your earnings and deductible expenses throughout the year. Tools like QuickBooks or other accounting software can simplify this process.

Set Aside Money for Taxes

A good rule of thumb is to set aside 25-30% of your earnings for taxes. Keeping these funds in a separate savings account can prevent you from being caught off guard by large payments.

Work with a Tax Professional

Navigating the tax code as an independent contractor can be complex. A CPA or tax advisor with experience in healthcare professionals can help you maximize deductions, ensure compliance, and minimize your tax liability.

Understand State Tax Obligations

If you work in multiple states, be aware that you may need to file tax returns in each state where you earned income. A tax professional can help you navigate these multi-state filings.

Plan for Retirement

As an independent contractor, you have access to tax-advantaged retirement plans, such as a SEP IRA or Solo 401(k). These options allow you to save for retirement while reducing your taxable income.

Avoiding Common Tax Mistakes

Missing Quarterly Payments

Many new contractors overlook the requirement for estimated tax payments, leading to penalties.

Not Keeping Receipts

Without proper documentation, you may lose out on valuable deductions.

Ignoring State-Specific Requirements

Each state has its own tax rules, which can complicate filings if you work in multiple locations.

Confidently manage your financial obligations

Handling taxes as a 1099 independent contractor can feel overwhelming, but with proper preparation and professional guidance, you can confidently manage your financial obligations. By staying organized, planning ahead, and leveraging available resources, you can maximize your earnings and focus on what you do best—delivering exceptional care as a locum tenens provider.

Ready to explore new opportunities in locum tenens? Visit TheraEx Locums to find your next assignment and take the next step in your healthcare career.

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