Sunday, January 29, 2023
Home Health & Fitness What are the tax benefits for locum tenens job?

What are the tax benefits for locum tenens job?

Are you working as a locum tenens physician? In that case, you are not an employee but an independent contractor. If you are working in multiple states throughout the financial year, it will add more complexity during the taxation period. You may need to file income tax in all the states wherever you worked. By doing so, it is clear that your expense will increase for sure. These are the tax-related disadvantages when you opt for a locum tenens job.

Of course, there are many tax-related benefits as well that can easily outweigh them. Regarding the work mode, you are in full control of your work schedule with the utmost flexibility you prefer. At the same time, you will end up making more money. Since you are the employer of yourself, it is really possible to do many write-offs for reducing the taxation costs.

As you understand the benefits of undertaking a locum tenens job, you will make good arrangements according to the schedule. Let us go through the factors of taxation every locum provider should be fully aware of.

Duties of Your Employer

Remember very well that you are the employer of your own. Despite contracting out to care facilities such as private practices, clinics, as well as hospitals, it is you who will be held responsible for all your taxes. Are you wondering what it means?

The healthcare facilities including private practices, clinics, as well as hospitals you contract with are termed as clients and not employers. In that case, your clients will not pay tax for you.

Mostly, employers withhold state as well as federal tax, social security, and other related fees from their employees’ salaries. However, if you are in a locum tenens job, it is you who should pay those fees from your annual income when you file the income tax return.

In contrast to full-time employees, locum tenens should give up 401K and health insurance. In such cases, independent contractors like you can ask for higher pay. And the only reason is you are taking away the burden of add-on costs like 401K and health insurance.

Read more: CareLogic EMR – Complete Features Analysis

Deductions

In contrast to full-time employees, locum tenens providers need to do more out-of-pocket expenses. However, you can claim deductions for those every expense to reduce the tax burden. Here is the list of deductions that you are eligible to make use of:

  1. Health Insurance

As mentioned already, you are your employer of yourself. Hence, it is recommended that you should buy a health insurance policy. You can purchase it either through the state exchange or private insurers. Once you purchase it, you can pay the health insurance premium. By doing so, you can right away write off the premium expense. It will then significantly reduce the overall tax while filing the tax return.

  • Retirement Savings Plan

You are eligible to save for your retirement. Some plans could be tax deductible and others could be tax deferred. So, select the right saving plan after understanding the difference between them. Only then, you can save more by the end of the year.

  • Travel Costs

Either your client will take charge of your lodging, travel, and other expenses, or you will have to pay these costs. Ultimately, you can deduct them during the taxation period. You are eligible to claim automotive costs either via the original expenses or mileage method. Similarly, you can avail of 100 percent deductions for lodging and travel costs. There is a possibility of a 50 percent deduction in means as well in case the contract duration stays for less than one year. Keep in mind to maintain all the receipts for your expenses in one place so that you can manage audits.

  • Education Expenses

Being a locum physician, you should keep yourself updated by continuing your education. You should remain updated with credentials and licenses on time. They come under business expenses so you can deduct them during the income tax return filing.

Wrapping Up

As you think, the entire taxation process is not complicated for locum physicians. There are many potential deductions exclusively available for locum contracts. You should be careful with one point. Pay attention to the limit that you are about to write off. Only then, you can stay away from potential red flags with the IRS. Without any further delay, consult a qualified and experienced tax specialist.  They can help you with more legal tax deduction opportunities.

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