Ways You Can Save Taxes As A Locums Doc
If you work locum tenens, you're self-employed for tax purposes — and that comes with real opportunities to lower your tax bill. Here are three ways to do it: keep good records, deduct all your unreimbursed expenses, and maximize the deductions specific to self-employment.
Keep Good Records
Good records matter for three reasons:
You capture every deduction you're entitled to.
You reduce the time and stress of pulling everything together at tax time.
If you have an LLC, keeping personal and business finances separate preserves the liability protection the LLC was set up to provide.
With today's tools, staying organized is easier than it used to be:
Run all locums revenue and expenses through a separate bank account and credit card, whether or not you have an LLC. If you don't have many transactions, this alone may be enough — just export the transactions to a spreadsheet at tax time and label as needed.
Use your phone's note-taking app, or a dedicated app like Evernote (no financial relationship), to log expenses as they happen.
Keep a folder in your cloud storage.
Track mileage and travel expenses with an app like TripLog (no financial relationship).
Or go old-school: a paper folder works too.
Don't overbuild your system before you've started. Try one of these methods, then adjust as you go.
Deduct All Unreimbursed Expenses
This should go without saying, but deduct everything you're entitled to — which is exactly why good records matter. To qualify, an expense must meet two tests:
Ordinary and necessary for your work. A solid-gold stethoscope wouldn't qualify.
Unreimbursed. You can't double-dip — if the locums agency or a W-2 employer already reimbursed you, you can't also deduct it. If reimbursement is available, take it instead.
Common deductible expenses, if unreimbursed, include:
Travel, lodging, and 50% of meals (100% if the trip is entirely outside your home area)
The cost of driving between home and your locums sites — gas, maintenance, insurance, parking, tolls. You can track actual expenses, but the simpler route is the standard mileage method: multiply your locums miles by the IRS mileage rate (72.5 cents/mile for 2026). It adds up faster than you'd think.
Cell phone, laptop, iPad, printer, toner, and other technology
Home internet and cell phone service
CME, licensing fees, publications, and dues
Malpractice insurance
Uniforms (lab coat, scrubs)
One note: the IRS wants the date, business purpose, and who was present for each expense. Keep these notes contemporaneously — as you go — rather than trying to reconstruct them later if you're audited.
Maximize Deductions Related To Self-Employment
Any business can take the deductions above. But being self-employed unlocks a few more — three big ones, plus one smaller deduction people often miss.
Self-Employed Health Insurance Deduction
If you buy your own health insurance because you don't have access to employer-sponsored coverage (through yourself or a spouse), your premiums are tax-deductible.
For example, at an assumed 35% tax savings rate, a $20,000 annual premium would effectively cost about $13,000 after taxes ($20,000 × (1 – 0.35) = $13,000). Your actual savings depend on your specific tax bracket and situation.
Self-Employed Retirement Account Contributions
A self-employed retirement account lets you shelter part of your locums income from tax. You can set one up yourself or work with a financial advisor to do it.
Two accounts worth considering: the SEP IRA and the solo 401(k). Which one fits you best depends on your situation — the solo 401(k) is more complex to administer but may allow larger contributions and offers other potential advantages.
Qualified Business Income Deduction
The 2017 Tax Cuts and Jobs Act created the Qualified Business Income deduction, letting self-employed people — including locums docs — deduct up to 20% of their self-employment income in some cases. It's a significant tax benefit if you qualify.
As a physician, medicine is classified as a "specified service trade or business" (SSTB), so the QBI deduction phases out completely once your taxable income exceeds the upper threshold — there's no partial deduction above that line the way there is for non-SSTB businesses. For 2026, single filers phase out between roughly $201,775 and $276,775 of taxable income; for married filing jointly, the range is roughly $403,500 to $553,500. Below the lower threshold, you get the full 20% deduction; above the upper threshold, physicians get none.
One important update: the QBI deduction was originally set to expire after 2025, but OBBBA made it permanent. If you were told this deduction was going away, that's no longer accurate. Because the deduction is so valuable near the phase-out range, it's often worth using every available strategy — retirement contributions, timing of income, etc. — to keep your taxable income below the threshold.
Home Office Deduction
This one isn't huge, but locums docs and their tax preparers often miss it.
If you don't have an office away from home for your self-employment work — and as a locums doc, the hospital where you work shifts doesn't count — you can deduct the portion of your home used regularly and exclusively for that work. You can calculate actual expenses, or use the simplified method: $5 per square foot, up to 300 square feet, for a maximum deduction of $1,500. The simplified method is much easier if you're doing your own taxes.
Ways You CAN'T Save Taxes
Just as important as what works: three things that don't actually save you money, plus one habit that erodes your peace of mind.
Keep Sloppy Records
Don't join the many self-employed people who keep sloppy records — or none. At best, it means more work getting ready for tax time. At worst, you'll miss deductions (paying more tax than necessary) and risk losing the liability protection your LLC provides, if you have one.
Form An LLC
It's a common misconception that forming an LLC saves you money on taxes. This fits the dictionary definition of an urban legend — a story based on hearsay, widely repeated as true, without much basis in fact.
Forming an LLC, by itself, gives you zero tax savings. With or without one, you can deduct the same ordinary and necessary business expenses. An LLC doesn't make expenses deductible that wouldn't otherwise be — it's a legal structure, not a tax strategy.
Deduct The Kitchen Sink
You're unlikely to be audited, but keep your deductions to legitimate business expenses — not your groceries, not your toilet paper, not the kitchen sink.
Peace of mind matters. You want to be confident that if you are ever audited, every deduction you've claimed holds up.
To learn more about locum tenens taxes, check out our complete guide.
Ready to put this into practice? If you're an ER physician or high-income professional looking for straightforward, evidence-based financial guidance, we'd love to connect. Schedule a free intro call with Yahara Wealth Management — no pressure, no sales pitch, just a conversation.
This material is for educational and informational purposes only and should not be construed as personalized tax, legal, or investment advice. Tax laws are complex and subject to change; consult a qualified tax professional or financial advisor regarding your individual situation. Any hypothetical examples are for illustrative purposes only and do not represent actual client outcomes or guaranteed results.