W-2 vs. 1099: What Locum Tenens Physicians and APPs Need to Know
Choosing to work locum tenens is a major career decision for any clinician. It offers flexibility, diverse experiences, and often higher pay. Once you decide to pursue locum jobs, another key choice arises: should you work as a W-2 employee or a 1099 independent contractor?
This is a crucial question, especially for early-career physicians, nurse practitioners (NPs), physician assistants (PAs), and certified registered nurse anesthetists (CRNAs) new to the locum tenens world.
Understanding the difference between these two employment models is essential for managing your finances, taxes, and career. This guide will break down the specifics of W-2 and 1099 employment to help you decide which path best fits your professional and personal goals.
W-2 Employee: The Traditional Path
Working as a W-2 employee for a locum tenens agency means you are officially employed by that agency. This structure is similar to a traditional, permanent position. The agency handles many of the administrative and financial details, allowing you to focus on your clinical duties.
Key Benefits of W-2 Employment:
- Tax Withholding: Your employer automatically withholds federal, state, and local income taxes from each paycheck. They also pay their share of Social Security and Medicare taxes (FICA), which is 7.65%.
- Benefits Packages: Many agencies offer benefits to their W-2 employees. These can include health insurance, dental and vision coverage, and retirement savings plans like a 401(k).
- Simplified Tax Filing: At the end of the year, you receive a Form W-2 that summarizes your earnings and taxes paid, making tax filing relatively straightforward.
- Malpractice Insurance: The staffing agency typically provides comprehensive malpractice insurance, often with tail coverage, giving you peace of mind.
- Administrative Support: Your agency manages credentialing, licensing, and travel logistics, saving you significant time and effort.
This path is often preferred by locum clinicians who value predictability, administrative support, and access to traditional employment benefits.
1099 Independent Contractor: The Entrepreneurial Route
As a 1099 independent contractor, you are essentially self-employed. You provide your clinical services to a healthcare facility through an agency, but you are not an employee of that agency. This model offers greater autonomy and potential financial advantages, but it also comes with more responsibility.
Key Aspects of 1099 Employment:
- Full Tax Responsibility: You receive your full, untaxed pay. You are responsible for calculating and paying your own estimated taxes to the IRS quarterly. This includes the full FICA tax (15.3% for both the employee and employer portions), also known as the self-employment tax.
- Business Deductions: As a business owner, you can deduct business-related expenses. These may include health insurance premiums, retirement plan contributions, continuing medical education (CME) costs, travel, and home office expenses.
- Greater Control: You have more freedom to manage your schedule and finances. You are in charge of sourcing your own benefits, including health insurance and retirement plans (like a SEP IRA or Solo 401(k)).
- Malpractice Insurance: You are usually responsible for obtaining and paying for your own malpractice insurance.
- Administrative Tasks: You handle your own business administration, including bookkeeping, tax payments, and managing your own benefits.
This route is ideal for locum clinicians who are entrepreneurial, disciplined with their finances, and want to maximize potential tax deductions.
Which Path Is Right for You?
The choice between W-2 and 1099 depends on your personal preferences, financial discipline, and career goals. If you're a new locum tenens physician or advanced practice provider, the simplicity and security of a W-2 arrangement can be an excellent starting point. It allows you to acclimate to the locum lifestyle without the added complexity of managing a business.
On the other hand, if you are comfortable with handling your own taxes, benefits, and business administration, the 1099 path may offer greater financial rewards through tax deductions and higher take-home pay.
Regardless of which path you choose, working with a reputable locum tenens agency like AMN Healthcare can provide invaluable support. Our experienced recruiters can connect you with a wide range of locum tenens jobs, including physician jobs, CRNA jobs, nurse practitioner jobs, and physician assistant jobs, and guide you through the process every step of the way.
Find Your Next Locum Tenens Job
Ready to explore the freedom and flexibility of a locum tenens career? AMN Healthcare offers a variety of W-2 and 1099 opportunities tailored to your needs. We provide the support and resources you need to succeed as a locum clinician, whether you're just starting or are a seasoned professional.
Search for locum jobs today and take the next step in your healthcare career.
