Experienced locum physician Dr Nii Darko shares his insights on the tax benefits that are available to locum tenens physicians.
As a freshly graduated trauma/critical care surgeon, I had no idea that locum tenens existed. It wasn’t until I had a less-than-favorable encounter while looking for a permanent position that I began to examine my options.
Understanding the logistics of working as a locum was one thing, but understanding the tax implications of locum tenens was another. Now 10 years into working as an independent contractor, I’ve learned that the tax benefits can be pretty significant.
Keep in mind that each individual’s situation is unique. Be sure to consult with a qualified tax professional to find out how best to use these tax benefits for your particular situation.
Be a locum tax pro: The beginner’s guide to locum tenens taxes
So, if you are or are thinking about being a locum tenens doc, here are seven specific tax benefits that might be available to you.
1. Business travel
Did you know that driving your car to a locum assignment can result in a mileage tax deduction? In some cases, a 100% deduction of the cost of the car, fuel (or charge for electric cars), and even car insurance is possible!
For a long time, I had the facility rent a car for me and missed out on those deductions. Nowadays, I drive my own car, and let’s just say that I have a smile on my face even in heavy traffic.
2. Meals … for free?
You can deduct the cost of meals while traveling for work as a locum tenens doctor. This deduction is especially beneficial if you’re working in a major city with a high cost of living.
Personally, I order a meal delivery service to be sent to my hotel before I arrive at my assignment. This way, I can have more healthy options and a more predictable eating schedule.
The calories are low and so are the taxes!
3. Continuing Medical Education (CME)
The cost of continuing medical education (CME) is 100% deductible for locum tenens doctors. This deduction can really add up, especially if you’re attending multiple conferences or courses throughout the year.
Remember, as long as the expenses are business related, they may be eligible for tax deduction. No need to confine yourself to online credits. Go to that conference in a tropical location if you’d like!
4. Scrubs, gadgets, and equipment are all write-offs
One of the many perks of being a locum tenens is deducting of the cost of your phone, gadgets, clothes, and medical equipment. Using your phone, tablet, and/or computer in any work-related fashion can justify a tax deduction.
Need a new stethoscope, scrubs, scrub shoes, or white coat? Well, since you’d be using these during your locum assignment, they are tax deductible. So, go ahead and stand in line overnight for that new iPhone!
5. Free or reduced lodging
Wherever your assignment takes you, you can deduct your lodging. Apart from seeing the world while doing what you love, you also get to visit and live in some pretty amazing places for free.
Most locum tenens agencies will cover the cost of your lodging, so while not a real tax deduction, it certainly is a money saver. If by some chance you have a hotel expense related to acquiring or working during an assignment, then a tax deduction is very likely.
6. Home office deductions
If you’re working as a locum tenens doctor, there’s a good chance you’re doing at least some work-related business from home. Whether that’s taking phone calls, answering emails, doing conference calls, or telemedicine, designating a home office is a great way to get a tax deduction.
You can deduct a portion of your rent or mortgage, your utilities — including internet — and other home office expenses. I even have my business write a check for rent to make it more official and easier to document.
7. Health insurance
Lots of docs worry about their ability to get health insurance as a physician independent contractor. Well, health insurance is available in the marketplace. Barring any special circumstances, any locum doctor should be able to get health insurance and get it deducted as a business expense.
While I’ve worked as a locum for 10 years, six of those have been solely as an independently contracted locum doc. As a husband and father, I have always been able to insure my family without lapse.
Final thoughts on tax deductions for locum tenens physicians
There are more tax benefits available to locum tenens doctors. Be sure to talk to a licensed tax professional to help you take advantage of all the self-employed deductions available to you.
If you want to learn more about tax benefits, check out my Tax Series on Docs Outside the Box podcast. I talk with Certified Public Accountant and tax planner Eric McGlothen about how both employed and locum doctors can maximize their tax benefits.