- Joined
- Feb 10, 2002
- Messages
- 470
- Reaction score
- 93
I'm currently doing a fellowship in Developmental/Behavioral Pediatrics, unfortunately, my fellowship stipend is not enough for me these days as I am now repaying a ton of my medical school loans... being out of residency and licensed in this state allows me to earn some extra moonlighting cash to make ends meet... and to be honest, DB Peds is not entirely a clinically intense fellowship so I have some time to do some extra work every now and then.
One of them is doing locum tenens for various pediatricians in the community from a few days to a couple of weeks. The money seemed to be coming in well, and I was saving a ton in my bank account.....
.... then tax time came..... OUCH!
First off, you get the lump sum.. so all the money you earn is not yours and eventually will have to go to Unce Sam as an income tax. Fair enough... I knew that.
But remember, as an independent person doing locum tenens, you are now considered a small business and self employed. So doing schedule C made sense. I was able to deduct expenses such as malpractice insurance, using my car to get to the clinics (decided to use the standardized mileage rate), and I'm thinking of using my laptop computer and cell phone purchase (as well as internet and cell phone membership) based on a percentage of business use.
But what took me by suprise was that self employment tax. Basically, in addition to the 25% (my particular tax bracket as a fellow and moonlighter) you owe the government as income, you have to slap on another 15% to cover social security and medicare costs most regular "employed" people would already have deducted on their paycheck (actually for them they only pay 7.5%, their employer pays the other half, but since you're self employed, you get stuck with both halves).
So I had this pretty sum of cash sitting in my checking account, thinking I can have some fun this summer, but I just saw it all go away this week.
Moral of this story for locums (or any other independent moonlighters for that matter)..... keep your records. Save your internet, cell phone bills, car mileage rates or car repair costs, malpractice premiums, licensure expenses, books which you purchase and use for your trade.... etc... ANYTHING which is remotely related to your business. Because they can possibly help you a bunch come tax time. Oh yeah and remember that 1/2 you pay for the SE tax is deductible from your overall income.
For any experienced independent moonlighters or locum tenen peeps out there, please feel free to add more advice.... I'm definitely open to hearing some suggestions. For the locum peeps out there, unless you are hired as an employee for a locum agency, realize you're a "one man" small business, so anything earning you get from the docs you cover.... a good rule of thumb is to consider 50% already owned by uncle sam.
Regards,
(thinking now that a flat tax [of all types of earnings] may actually be a good idea)
Nardo
One of them is doing locum tenens for various pediatricians in the community from a few days to a couple of weeks. The money seemed to be coming in well, and I was saving a ton in my bank account.....
.... then tax time came..... OUCH!
First off, you get the lump sum.. so all the money you earn is not yours and eventually will have to go to Unce Sam as an income tax. Fair enough... I knew that.
But remember, as an independent person doing locum tenens, you are now considered a small business and self employed. So doing schedule C made sense. I was able to deduct expenses such as malpractice insurance, using my car to get to the clinics (decided to use the standardized mileage rate), and I'm thinking of using my laptop computer and cell phone purchase (as well as internet and cell phone membership) based on a percentage of business use.
But what took me by suprise was that self employment tax. Basically, in addition to the 25% (my particular tax bracket as a fellow and moonlighter) you owe the government as income, you have to slap on another 15% to cover social security and medicare costs most regular "employed" people would already have deducted on their paycheck (actually for them they only pay 7.5%, their employer pays the other half, but since you're self employed, you get stuck with both halves).
So I had this pretty sum of cash sitting in my checking account, thinking I can have some fun this summer, but I just saw it all go away this week.
Moral of this story for locums (or any other independent moonlighters for that matter)..... keep your records. Save your internet, cell phone bills, car mileage rates or car repair costs, malpractice premiums, licensure expenses, books which you purchase and use for your trade.... etc... ANYTHING which is remotely related to your business. Because they can possibly help you a bunch come tax time. Oh yeah and remember that 1/2 you pay for the SE tax is deductible from your overall income.
For any experienced independent moonlighters or locum tenen peeps out there, please feel free to add more advice.... I'm definitely open to hearing some suggestions. For the locum peeps out there, unless you are hired as an employee for a locum agency, realize you're a "one man" small business, so anything earning you get from the docs you cover.... a good rule of thumb is to consider 50% already owned by uncle sam.
Regards,
(thinking now that a flat tax [of all types of earnings] may actually be a good idea)
Nardo
I also was really bad about saving receipts last year, so it may be difficult to be all that creative with schedule C. I'm considering seeking accountant advice next year, especially now that I am keeping my records/receipts around. Believe me though, I've read those irs publications up and down trying to see what I could possibly use as a deduction. 
