It's easy to forget about the IRS's less thrilling yearly torture - the tax season. Being an independent contractor is one of the many benefits of a locum tenens career. Because you don't have an employer paying taxes on your behalf though, being an independent contractor comes with the obligation, and even irritation, of tax filing. We've put together these locum tenens tax guidelines to help you get your tax preparation as structured and straightforward as possible.
Hire a Tax Filing Professional
Filing your tax can be tedious and costly, especially in light of recent tax legal changes. As a locum physician or skilled practitioner, you may face a more difficult tax situation that is better done by an experienced tax professional. The IRS may ask you to submit Form 1040 and many other forms based on your circumstances. If you operate in several states throughout the year, a tax expert can advise you on filing each tax form. Your tax preparer can also assist you in maximizing your tax deductions and streamlining your record-keeping and estimated tax payment processes.
Take Advantage of Deductions
Request a checklist of probable costs and reductions when consulting with your tax expert. Parking tolls, journal memberships, supplies and equipment, internet and mobile, licensing and certification test costs, or even your garb or lab coat may be company expenditures or deductions you haven't considered! Dr. Vlad Dzhashi, otherwise known as The Locum Guy, has a very comprehensive blog post regarding locum tenens physician tax deductions - we definitely suggest checking it out!
Identify any uncompensated out-of-pocket costs and consult with a tax professional to see whether you qualify. Also, keep in mind that your health care premiums are tax-deductible. Examine whether a high-deductible program combined with a health savings account might help you save money.
Keep Up with Records and Receipts
Your tax adviser can guide you about which precise documents and receipts to save once you've adequately assessed your work-related spending. Although practically all records and invoices are now processed electronically, it is still good to keep paper receipts wherever feasible. You'll also need all appropriate tax forms and relevant invoices and bills.
Reach Out to the IRS If You Haven't Received the 1090-Misc Tax Form or Other Forms
Companies utilize Form 1099-MISC to record independent contractors' remuneration. Any organization that rewards you $600 or over annually should send you form 1099-MISC. If you act as a locum tenens clinician, you should get this paperwork from the locum tenens staffing firm(s) you worked with. The IRS requires enterprises to file and submit all 1099s to independent contractors. If you haven't gotten your 1099 form by the deadline (In 2022, the deadline is January 31st), call your locum tenens firm right away.
Pay Quarterly Estimated Taxes
Because you won't have your taxes withheld by your employer, you'll have to settle them personally. You can pay your anticipated taxes quarterly using the IRS's portal. Your tax advisor may assist you in determining how much you are supposed to pay, but you can alter this figure quarterly depending on your income if necessary. If you do it this way, you won't underpay or overpay at tax time. Setting up an independent line of credit for taxes with each payment will benefit you.
Set Some Funds Aside for Retirement
Don't overlook this massive tax break! Not only will staking out your retirement plan choices help you save for the future, but it will also provide you with substantial tax benefits. A tax deduction on a retirement scheme allows you to set funds aside which will not be taxable, lowering your tax burden. Your accountant can help you figure out which option is better for your earning and retirement objectives. On that topic, a skilled accountant may also assist you in saving money on your taxes!
Get Ready to File
Filing taxes can be stressful and confusing no matter who you are. Hopefully, with these tips, and a consultation with a qualified tax specialist, you’ll feel more confident filing your taxes as an independent contractor while reaping all of the benefits that this exciting career path has to offer!
