Financial Planning for Locums

[C35]

Hello,

Long time lurker.

I am fresh out of fellowship FM/SM physician in Michigan, filing single, $0 debt, have contributed to traditional IRA for the last 4 years as well. No other investments or assets, $20k of savings. Income will be varied, but hopefully at least $5k/week. 

I've decided on doing locums, and was wondering how I should go about it as I'd be a contractor, thus filing a 1099.

I've read up on developing an S corporation, but concerned about specifics that entail forming such a corp based, so can someone guide me with this a bit? 

Also, as with locums, I am not eligible for insurance, but as I understand:

1) I could deduct this from taxes, as well as writing off the travel/accommodation?

2) If my corporation is listed in Texas, how would tax deduction work if I work in Michigan? I.e. How much of travel can I deduct (return flight from Michigan, daily travel from hotel site to work site), and how would accommodation deduction work? 

 

Thanks!

 

 

[jfoxcpacfp]

1. I wouldn’t recommend an s-corporation until your net profits will be $300k - $350k.


2. You should be able deduct your travel to other locales but rules come into play about your tax home if you are permanently working in other locations and remaining in TX.


3. You will owe state taxes on all work done in states with an income tax code.


4. You can deduct your malpractice insurance from your revenue (presume that is what you mean by “I am not eligible for insurance...”) It is unusual to work for a locums company that does not provide malpractice, though - are you sure about this?

I hope you will consider a relationship with an experienced CPA who is familiar with multi-state locums work and can address the concerns specific to you.

[C35]

Thank you for your help. 

1. So is there anything else you would recommend in place of the S Corp? PLLC? 

4. I meant health insurance etc. Malpractice covered by locums firm. 

[jfoxcpacfp]

C35 wrote:

Thank you for your help. 

1. So is there anything else you would recommend in place of the S Corp? PLLC? 

4. I meant health insurance etc. Malpractice covered by locums firm. 

Click to expand...

You’re welcome.

1. As long as you have adequate malpractice in place, a sole proprietorship should be fine.

2. You can deduct self-employed health insurance (SEHI) for your business “above the line” on page 1 of your 1040.