A W-2 employer withholds tax from each paycheck and sends you one form at the end of the year. On 1099 income, no tax is withheld and nobody keeps the records for you. You pay the tax yourself and you hold the paperwork that supports your return.
This post covers the records a locum clinician on 1099 income generally keeps. It's educational and isn't tax advice. A CPA who works with independent contractors can apply it to your situation. The taxes guide in our resources explains how self-employment tax and estimated payments work.
Confirm Whether Your Locum Income Is 1099 or W-2
Locum work is often paid on a 1099, but not always. The classification depends on the agency or platform and on the agreement you sign. A clinician who works through more than one can have both kinds of income in the same year.
Check the agreement for each place you work and keep a copy. It shows how you're paid, what's reimbursed, and who carries malpractice coverage. Your CPA will ask for all three.
Income Records for 1099 Locum Work
A payer that pays you as a contractor reports those payments on a Form 1099-NEC after the year ends. If you work for several payers, you get several forms.
Keep your own log during the year and don't wait for the forms. For each shift, record:
- The date and the facility
- The state where you worked
- The hours and the rate
- The amount paid and the date it reached your account
- Who paid you
At year-end, compare each form with your log. If a form doesn't match what you received, ask the payer about it before you file. Keep the pay statements or deposit records that support each entry.
Expense Records for 1099 Locum Work
A self-employed person reports business income and expenses on Schedule C. Which of your expenses qualify, and under what conditions, is a question for your CPA. A CPA can only evaluate an expense you can document.
You can use any record-keeping system that clearly shows your income and expenses. For each cost you pay in order to work, keep:
- The receipt, invoice or statement
- The date and the amount
- Who you paid
- What it was for, in a few words, written when you paid it
That last note is the one people skip. A card statement shows a charge and doesn't show its purpose. Six months later you may not remember it.
If you travel to shifts, keep a travel log with the date, where you went and which shift it was for. If a facility or agency reimburses a cost, keep the record of the reimbursement with the receipt, so the same cost isn't counted twice.
A separate bank account and card for locum income and costs puts these records in one place. It also keeps personal spending out of the file you hand to your CPA.
Records of Where You Worked
Working shifts in more than one state can mean filing in more than one state. The rules differ from state to state.
Your shift log already has the state for each shift. From it, your CPA can total the days worked and the income earned in each state. Rebuilding that from memory in March is slow, and the totals come out less accurate.
Tell your CPA about a new state when you start working there. Don't wait until tax season.
Records of Estimated Payments on 1099 Income
Because nothing is withheld, estimated tax is how a self-employed person pays income tax, Social Security and Medicare during the year. Form 1040-ES is used to figure the payments. States with an income tax have their own version.
How much to pay is a calculation to do with your CPA. Your part is the record. For each payment, federal and state, keep:
- The date you paid
- The amount
- The tax year and the period it was for
- The confirmation number or receipt
Your return credits these payments against what you owe. A payment you can't show takes time to trace.
How Long to Keep 1099 Tax Records
Keep records as long as they're needed to prove the income or deductions on a return. The period that applies to you depends on your return, and states set their own. Ask your CPA how long to keep each kind of record.
Store digital copies as well as paper. A receipt printed on thermal paper fades, and a scan doesn't.
What to Bring to Your CPA
A CPA can work faster and more accurately with a complete file. At year-end, bring:
- Every Form 1099-NEC and every W-2
- Your shift log, with income by payer and by state
- Your expense records, with the purpose noted for each
- Your travel log
- Your estimated payment records, federal and state
- A copy of each agreement you worked under
If you're starting 1099 locum work this year, meet a CPA before your first shift. They can tell you which records matter for your situation and set up the estimated payments with you.
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