Benefits Of Being Locums Tenens
As a locum tenens provider, you’re considered an independent contractor and you need to be prepared to pay your own taxes. Your hiring firm may not be required to withhold any federal or state taxes from your compensation. Additionally, you’ll most likely need to remit estimated taxes each quarter to the Internal Revenue Service (IRS) or state, depending on your situation.
Tax rates can actually be lower for independent contractors receiving a 1099. With typical W-2 positions, your gross pay is taxed at your ordinary income tax rate plus ½ of FICA (the employer pays the other half). As an independent contractor, you can write off work-related expenses, including, in some instances, travel, supplies, and moving expenses.
Consult your tax accountant early so you can plan accordingly and capture write-offs applicable to your situation. You will pay both the employer and employee share of FICA taxes, however, you will be paying based on your net income (after the write-offs) instead of gross.
As an independent contractor, you are considered self-employed and can open a Limited Liability Company (LLC) or Corporation to receive your income through. Now, you’re a small business owner!