First Time Working as a 1099 Contractor

My first year working as a nurse practitioner, I worked for a primary care clinic as a 1099 contractor. I was paid hourly without benefits. The hourly rate was pretty high for a new grad since no benefits were provided. No taxes were deducted from my paychecks. 

At the same time, I was also working as a nursing instructor part-time. This was a W2 position, so my taxes were automatically taken out of my paychecks. 

Fast forward to the following year when it was time to file my income taxes. I figured since I was paying taxes on my W2 income, that I wouldn’t need to pay taxes on my 1099 income. I went to a CPA that was recommended and we worked on my taxes together. I was disappointed to find out, that although I had already paid ~$20k in taxes through my W2 position, I owed the IRS an additional $10k on my 1099 income. 

Since at that time I didn’t own a home, had no children, or any medical expenses, my CPA told me I didn’t qualify for any tax deductions. I cried that day out of disappointment and paid uncle Sam what I owed. 

Later on, I did my own research, and realized since I was a sole proprietor (same thing as a 1099 contractor), I could deduct a lot of my work-related expenses. This included the $5k I was paying per year for malpractice insurance, license renewal fees, uniform costs, my car lease, cost of tolls, continuing educations fees, cell phone bill, etc. 

I couldn’t believe my CPA didn’t recommend these deductions that I clearly qualified for! The following year, I did my taxes myself with my dad. I had the same 1099 NP job and the W2 instructor job. And guess what? By itemizing my deductions for my 1099 income, I didn’t have to pay the IRS additional taxes this time. Instead, I actually got a refund! 

It turns out, the sweet spot is working as a 1099 contractor and being able to deduct your expenses which will decrease your overall tax burden. Being a 1099 Traveling Nurse Practitioner is icing on the cake. In addition to the items you can deduct that I listed above, you can deduct all meal expenses while on assignment, travel costs, and anything “extra” that your agency does not cover.

It’s important to educate yourself on taxes for 1099 contractors prior to filing your taxes or even accepting a traveling nurse practitioner contract. The tax code in the USA benefits self-employed individuals, but unfortunately, tax “loopholes” aren’t always obvious. So do your research or you too will have the burden of paying too much in income tax.