Locum Tenens Physician 1099 Tax Deduction Calculator 2026

Locum tenens physicians paid on 1099 are independent contractors. They owe self-employment (SE) tax of 15.3% on net earnings (Schedule SE), but unlock far more deductions than W-2 hospital employees. Under IRC §162, you can deduct ordinary and necessary business expenses — travel between assignments, lodging at temporary work sites, M&IE per diem (50% deductible under §274(n)), malpractice with tail coverage, CME courses, state medical licenses, DEA registration, and board certification dues. Then under IRC §199A you may take a 20% Qualified Business Income (QBI) deduction, though physician practice is a Specified Service Trade or Business (SSTB), so the deduction phases out above $241,950 single / $483,900 MFJ in 2026 taxable income. Last updated May 2026.

Self-Employment Tax 15.3% — How It Actually Works

SE tax (IRC §1401) is the combined employer + employee share of FICA: 12.4% Social Security on the first $168,600 of net earnings (2026 wage base) plus 2.9% Medicare with no cap. The 0.9% Additional Medicare Tax (IRC §3101(b)(2)) kicks in above $200,000 single / $250,000 MFJ. You compute SE tax on 92.35% of Schedule C net profit, then deduct half of SE tax above the line on Form 1040 Schedule 1. A locum earning $350,000 net pays roughly $24,000 in SE tax — which is also why solo 401(k) and SEP-IRA contributions are so valuable: they reduce QBI and federal income tax (but not SE tax).

Top IRC §162 Deductions for 1099 Locums

Locum-specific deductions stack quickly: travel between home and temporary work assignment (under 1 year per IRS Pub 463), lodging at the assignment city, per diem M&IE at GSA rates (50% deductible meals plus 100% incidentals), mileage at 67¢/mile (2026 IRS standard rate), malpractice premium plus expensive tail coverage when leaving an assignment, CME conference fees and travel, state medical licenses (locums often hold 5-15 active state licenses), DEA and CSR registrations, board certification dues, and credentialing fees. Home office for charting and billing if used regularly and exclusively for business may also qualify (Form 8829). Total deductions for a high-volume locum often hit $60,000-$120,000.

§199A QBI 20% Deduction — Watch the SSTB Phaseout

IRC §199A grants a 20% deduction on qualified business income from pass-through entities, but physicians are flagged as a Specified Service Trade or Business (SSTB) under §199A(d)(2)(A). For 2026, the phase-in starts at $241,950 taxable income (single) / $483,900 (MFJ) and completes $100,000 / $50,000 above that. Above the cap, SSTB physicians get $0 QBI deduction. The fix is to compress taxable income below the threshold via solo 401(k) (up to $70,000 in 2026), defined benefit plan (often $100,000+), HSA, and timing of expenses. Married filing jointly is the biggest single lever — the $483,900 cap is nearly double the single cap.

Common 1099 Locum Tax Mistakes

(1) Forgetting quarterly estimated payments — under-withholding triggers IRS Form 2210 penalty (~7% APR). Pay 110% of last year's tax in four installments. (2) Treating per diem as 100% deductible — only the lodging portion is 100% deductible; meals are 50% under IRC §274(n). (3) Mixing personal and business car use — must keep a contemporaneous mileage log or use a tracker app. (4) Skipping tail coverage as a deduction — when leaving a locum assignment, tail premiums of $3,000-$8,000 are fully deductible the year paid. (5) Missing §199A by $5,000 — if you'd qualify for QBI but your TI is just above the SSTB cap, a $5,000-$10,000 solo 401(k) bump can save $15,000+ in tax. Cite IRC §162, §199A, §1401, and IRS Publication 463 in your records.