The Contract Physician's 1099 Tax Guide

Medicine is first on the excluded list. So the 20% deduction is taken away from you.

When Congress created the deduction for business income, it wrote a list of fields that lose it above an income threshold, and the first word on that list is health. Below $201,750 of taxable income - $403,500 filing jointly - you get the full 20%. Above $276,750 or $553,500 you get nothing at all. And unlike a builder or a farmer, no payroll, no equipment and no S corporation brings it back.

What you'll learn

• Why medicine is an excluded field — and the three positions you can be in, with the 2026 numbers from the revenue procedure itself
• The slope, with numbers — how far through the band you are, and why an extra December shift costs more than your marginal rate
• Retirement, the lever that wins it back — a physician contributing $57,000 to a solo 401(k) recovers a $54,482 deduction - about $39,000 of tax, roughly 69% of the amount contributed. The deadline is October, not April
• The tax home — the reason some continuously travelling physicians cannot deduct lodging at all
• Your Social Security tax stops; your Medicare tax does not — the $184,500 cap, and the 0.9% surcharge above it
• Licences, DEA, credentialing and CME — across six states, and the one cost that is never deductible
• Quarterly taxes at 110%, not 100% — the signature error at this income
• The S corporation question — why the saving is 3.8%, not 15.3%, and why it cannot restore your deduction

Who this guide is for

• Locum tenens physicians working through agencies
• Direct hospital contractors and telemedicine physicians
• Anyone holding licences across several states
• Physicians who just left employment for contract work

Who it is not for

If you are an employed physician with tax withheld and a W-2 in January, this book is not for you - and it says so on the first page rather than the hundredth.

Why this one is different

Three appendices you will use, including an October worksheet that takes ten minutes and is the most valuable page in the book. Two chapters tell you plainly to stop and get advice - at this income, that is the honest answer.

Use it as an educational companion throughout the year, then bring your organized records and specific questions to a qualified tax professional when your situation calls for personalized advice.

Read on this subject

Free articles on the questions this guide covers, each one checked against IRS sources.

• The S-corp saving is 3.8% of one number. Work out which number first. Above the wage base the 12.4% has already stopped. Here is what is actually left, and the break-even.
• The biggest deduction on your return is not on Schedule C Your own contribution goes on Schedule 1. That decides exactly which taxes it cuts.