Most know that Locum tenens refers to the practice of temporarily filling the position of another physician or healthcare professional. Did you know locum tenens workers can enjoy many rewards, such as gaining diverse clinical experience, exploring new locations, and helping underserved communities? There are also significant financial and tax benefits. In this article, we will discuss how locum tenens can boost your income, reduce your expenses, and save you money on taxes. We will also provide some tips and resources to help you make the most of your locum tenens opportunities.
One of the main reasons why physicians and other healthcare professionals choose locum tenens is the higher pay rate. Locum tenens positions often offer higher hourly or daily rates than permanent positions, especially in high-demand specialties or rural areas. According to a 2023 report by Locumstory.com, emergency medicine, and orthopedic surgery saw the largest increases in locum tenens compensation, with average hourly rates ranging from $125 to $300 respectively. Other specialties, such as anesthesiology, neurology, and urology, also have high pay rates and many job options available.
Another financial benefit of locum tenens is the flexibility in scheduling. As a locum tenens worker, you can choose when and where to work, according to your availability and preferences. You can work as much or as little as you want, depending on your financial goals and personal needs. You can also take advantage of seasonal or regional variations in demand and pay. For example, you can work more during the winter months when there is a higher need for healthcare services, or you can work in warmer climates during the cold season. By having more control over your schedule, you can optimize your income and balance your work and life.
A third financial benefit of locum tenens is the reimbursement for travel and lodging. Many locum tenens assignments require you to travel to a different location, sometimes across state lines or even internationally. In most cases, the locum tenens agency or the hiring facility will cover the costs of your transportation, accommodation, and meals. Some agencies may also provide a stipend or a per diem allowance for your expenses. These reimbursements can add up to a significant amount of money, especially if you work in multiple locations or for long periods. They can also help you save on your travel costs if you decide to extend your stay or bring your family along.
In addition to the financial benefits, locum tenens also has some tax benefits that can lower your tax liability and increase your net income. As a locum tenens worker, you are considered an independent contractor, which means you are responsible for paying your own taxes. However, it also means you can deduct certain business expenses from your taxable income, such as:
- Travel expenses: You can deduct the costs of traveling to and from your locum tenens assignments, such as airfare, car rental, mileage, tolls, parking, and baggage fees. You can also deduct the costs of lodging and meals while you are away from your tax home.
- Continuing medical education: It’s possible to deduct the costs of attending courses, seminars, conferences, or other educational events that are related to your profession, such as tuition, registration, materials, and travel expenses.
- Professional fees and dues: Locum tenens can deduct the costs of maintaining their professional licenses, certifications, memberships, subscriptions, and malpractice insurance.
- Home office: Home office expenses can be deducted, such as mortgage interest, rent, utilities, insurance, and maintenance, if you use a part of your home exclusively and regularly for your business activities, such as charting, communicating with agencies, or applying for licenses.
- Equipment and supplies: You can deduct the costs of purchasing or renting equipment and supplies that are necessary for your work, such as computers, software, printers, scanners, phones, internet, books, journals, and medical instruments.
To claim these deductions, you need to keep track of your expenses and receipts and report them on Schedule C of your Form 1040. You also need to be aware of the IRS rules and limitations regarding these deductions, such as the 50% limit on meal expenses, the standard mileage rate for car expenses, and the two-year rule for travel expenses. It is advisable to consult with a tax professional who has experience with locum tenens taxes to ensure you are following the tax laws and maximizing your deductions.
Another tax benefit of locum tenens is the concept of maintaining a tax home. A tax home is the place where you have your main source of income or business, regardless of where you live. If you have a tax home, you can deduct your travel expenses when you work away from your tax home, as long as the assignment is temporary (less than one year) and you do not abandon your tax home. To establish and maintain a tax home, you need to meet three criteria:
- You perform part of your business in the area of your tax home and use that income to pay for your living expenses there.
- You have living expenses at your tax home that you duplicate while traveling away from it.
- You have not abandoned the area of your tax home, and you have a reasonable expectation of returning there.
By having a tax home, you can save a lot of money on taxes, as your travel reimbursements will not be considered taxable income. However, if you do not have a tax home, you will be considered an itinerant worker, and your travel reimbursements will be taxed as ordinary income. Therefore, it is important to understand the rules and implications of having a tax home and to plan your locum tenens assignments accordingly.
Locum tenens is not only a rewarding and fulfilling way to practice medicine, but also a lucrative and tax-efficient one. By working locum tenens, you can enjoy higher pay rates, flexible scheduling, and travel reimbursements that can boost your income and reduce your expenses. You can also take advantage of tax deductions and tax home benefits that can lower your tax liability and increase your net income. However, locum tenens taxes can be complex and confusing, and you need to be aware of the IRS rules and regulations that apply to your situation. Therefore, we encourage you to do further personal research or consult with a tax professional to fully understand the financial and tax implications of locum tenens. We hope this article has given you some useful information and insights to help you make the most of your locum tenens opportunities.