Tax advantages of being a Locums Physician
SMART is partners with Meridian Physician Solutions (http://mpsmd.com/), a financial planning and life guide to finances investment company. Even before that partnership with Meridian we have always been champions for physicians to be independent contractors or locum tenens physicians.
As a locums physician you enjoy the freedom of picking when you want to work and where you want to work but the benefits don’t stop there. As a locums physician, SMART and Meridian highly suggest you connect with us or a tax planner to learn about how and why you should incorporate yourself to take advantage of the several tax advantages offered to corporations versus filing income under you own social security number.
By creating your own LLC or PC or S Corp you then can pass taxable income into a few different tax categories that will lower your taxable income. First, you should create your own 401k or IRA plan that will allow you to put pre-tax money into equity or bond investments. Seek our friends from Meridian Physician Solutions http://mpsmd.com/ to learn more about how they can arrange this for you and what they recommend. They are certified and licensed investment professionals. Another method to lower your taxable income is to purchase a vehicle under your companies name provided it meets the Federal requirement for Small business owners. You can find that information through your CPA or on-line informing you what vehicles are eligible to receive this $25k tax credit every three years. Chances are you already own your own car but this should be something you examine regardless to enjoy this income tax saving.
Lastly, locums physicians need to be keeping track of their expenses (gas, food, entertainment) when they are on assignment or preparing for the next assignment. These are all taxable to state and federal governments to some degree and the locums physician should consult our friends again at Meridian to learn how to categorize these expenses and provide to your CPA at the end of each tax season.
Yes as an independent contractor you lose out on benefits like healthcare from your employer. However, employers are more and more passing these costs onto their employees. Health insurance is another item and a key item that the independent contractor should be writing off for taxes with their CPA.
If you’d like to discuss more or learn more please contact Patrick Moore, President of SMART Physician Recruiting at 414-550-5580 or contact Ali Chaudry, MD at Meridian Physician Solutions http://mpsmd.com/.