At Edgeford Healthcare, we empower you, our dedicated locum tenens providers, to deliver vital patient care across the country. However, understanding your tax obligations is key to financial peace of mind. This guide aims to simplify the tax season for you.
Your Status as an Independent Contractor with Edgeford Healthcare
When you accept assignments through Edgeford Healthcare, you are generally classified as an independent contractor, not a traditional W2 employee. This means your earnings will be reported on a Form 1099-NEC at tax time. Unlike a W2 where taxes are withheld, as a 1099 contractor, you are responsible for paying your own federal, state, and self-employment taxes.
Smart Deductions That Can Save You Money
One of the great benefits of being an independent contractor is the ability to deduct many business expenses, which can lower your taxable income. For Edgeford Healthcare providers, common deductible expenses include:
- Health Insurance Premiums: If you pay for your own health insurance and aren’t covered by an employer’s plan, you can typically deduct 100% of these costs.
- Travel, Lodging, and Meals: Unreimbursed expenses for flights, hotels, and 50% of meal costs incurred on temporary assignments away from your home can often be deducted.
- Automobile Expenses: Driving between different facilities for assignments, or from your home to a temporary job site, can be deductible.
- Education & Licenses: Costs for continuing medical education (CME), professional licenses, and exams that enhance your skills in your current role are generally deductible.
Understanding Self-Employment Tax and Quarterly Payments
As an independent contractor, you’re responsible for both the employer and employee portions of Social Security and Medicare taxes, collectively known as self-employment tax, which is 15.3%. Unlike W2 employees, these aren’t automatically taken from your pay. A good rule of thumb is to set aside around 40% of your income for taxes to ensure you’re prepared.
Navigating State Income Taxes When Working Across States
Many Edgeford Healthcare locum tenens assignments take you to different states. When it comes to state income taxes, the general rule is: you pay taxes based on where you work and where you live. Your resident state typically allows you to take a credit for taxes paid to other states where you worked, preventing double taxation on the same income. This can be complex, so professional advice is crucial.
Maximizing Your Savings with Tax Strategies
Beyond deductions, you can use certain “tax shelters” to reduce your taxable income and build your wealth:
- Retirement Accounts: Consider setting up a pre-tax retirement account like a SEP IRA or Solo 401(k) based on your locum tenens income. These contributions are tax-deductible and help you save for retirement.
- Health Savings Accounts (HSAs): If you have a high-deductible health insurance plan, contributions to an HSA are tax-deductible, grow tax-deferred, and can be used tax-free for medical expenses. At age 65, any remaining funds can be withdrawn penalty-free for any purpose.
See What Our Providers Are Saying
Find out why healthcare professionals trust Edgeford Healthcare for their locum tenens opportunities. Read real testimonials from providers who appreciate our expert support, seamless placements, and dedication to their career success.
Reach out to us today and let us help you find opportunities that fit your life and career. Together, we’ll make your next move your best one.