Understanding Locum Taxation
Locum CRNAs typically receive 1099 income, creating both tax obligations and opportunities for strategic planning.
The 1099 Tax Reality
What You Owe
| Tax Type | Rate | On First |
|---|
| **Federal income** | 22-37% | Varies by bracket |
| **Self-employment** | 15.3% | $160,200 (2025) |
| **Medicare surtax** | 0.9%+ | Over $200k single |
| **State income** | 0-13.3% | Varies by state |
Estimated Total Tax Burden
| Income | Without Planning | With Planning |
|---|
| $200,000 | 35-40% | 25-30% |
| $300,000 | 38-42% | 28-33% |
| $400,000 | 40-45% | 30-35% |
Good planning can save $20,000-40,000 annually.
Key Deductions for Locum CRNAs
Business Expenses
| Expense | Deductibility |
|---|
| **Malpractice insurance** | 100% |
| **License fees** | 100% |
| **DEA registration** | 100% |
| **CME courses** | 100% |
| **Professional dues** | 100% |
| **Credentialing costs** | 100% |
Travel Expenses
| Expense | Deductibility |
|---|
| **Airfare** | 100% |
| **Rental car** | Business portion |
| **Lodging** | 100% during assignments |
| **Meals** | 50% while traveling |
| **Mileage** | $0.67/mile (2025) |
Home Office
- Proportional rent/mortgage
- Utilities
- Internet
- Equipment
Retirement Account Strategies
Maximum Tax Deferral
| Account | 2025 Limit | Tax Savings |
|---|
| **SEP-IRA** | 25% of net (up to $69,000) | $15,000-25,000 |
| **Solo 401(k)** | $23,000 + 25% of net | $20,000-30,000 |
| **Traditional IRA** | $7,000 | $1,500-2,500 |
| **HSA** | $4,150 (single) | $900-1,500 |
Solo 401(k) vs SEP-IRA
| Factor | Solo 401(k) | SEP-IRA |
|---|
| **Max contribution** | Higher (at lower income) | 25% of net |
| **Complexity** | More paperwork | Simple |
| **Loan option** | Yes | No |
| **Roth option** | Yes | No |
Entity Structure Options
Sole Proprietorship
| Pros | Cons |
|---|
| Simple setup | Full SE tax exposure |
| Low cost | Unlimited liability |
| Easy tax filing | No salary flexibility |
LLC (Taxed as S-Corp)
| Pros | Cons |
|---|
| SE tax savings | Payroll required |
| Liability protection | More complexity |
| Salary + distribution split | Accounting costs |
S-Corp SE Tax Savings
- Pay yourself $150,000 salary (reasonable)
- Take $150,000 as distribution
- SE tax savings: ~$23,000
Quarterly Estimated Taxes
Payment Schedule
| Quarter | Due Date | Covers |
|---|
| Q1 | April 15 | Jan-Mar income |
| Q2 | June 15 | Apr-May income |
| Q3 | September 15 | Jun-Aug income |
| Q4 | January 15 | Sep-Dec income |
How Much to Pay
| Method | Approach |
|---|
| **Safe harbor** | 100% of prior year (110% if >$150k) |
| **Current year estimate** | 90% of current year |
| **Pay as you earn** | Calculate per assignment |
State Tax Strategies
Working in No-Tax States
| State | Income Tax |
|---|
| Texas | 0% |
| Florida | 0% |
| Nevada | 0% |
| Washington | 0% |
| Wyoming | 0% |
| Tennessee | 0% |
Multi-State Issues
- Track income by state
- File in each state worked
- Credit usually available
Common Tax Mistakes
Mistakes to Avoid
❌ Not paying estimated taxes — Big penalty
❌ Missing deductions — Leaving money behind
❌ Not tracking mileage — Significant write-off
❌ Ignoring state taxes — Surprise bills
❌ Wrong entity structure — Overpaying SE tax
❌ Missing retirement contributions — Lost tax savings
Finding a Good CPA
What to Look For
| Quality | Why It Matters |
|---|
| Healthcare experience | Understands locum world |
| 1099/self-employment focus | Knows the deductions |
| Proactive planning | Suggests strategies |
| Responsive communication | Available when needed |
Questions to Ask
- "Do you have other locum healthcare clients?"
- "What entity structure do you recommend?"
- "How do you handle multi-state filing?"
- "What's your approach to estimated taxes?"
Annual Tax Planning Calendar
| Month | Action |
|---|
| **January** | Review prior year, prep for Q4 payment |
| **April** | File return or extension, Q1 payment |
| **June** | Q2 payment, mid-year review |
| **September** | Q3 payment, retirement contribution planning |
| **December** | Year-end planning, maximize deductions |
Conclusion
Locum CRNAs face significant tax obligations but also have substantial planning opportunities. Key strategies include maximizing retirement contributions (Solo 401(k) or SEP-IRA), considering S-Corp election above $200k income, tracking all deductions meticulously, and working with a CPA experienced in locum taxation. Proper planning can save $20,000-40,000 annually compared to passive tax paying.
Tax information is general. Consult a tax professional for personalized advice.