Tax Guide for Healthcare Workers

Whether you're a nurse, physician, physical therapist, or medical technician, your tax situation depends heavily on whether you're an employee or self-employed. Most healthcare workers are employees and receive a W-2, but travel nurses, locum tenens physicians, and private practice owners have additional considerations.

Employees vs. Independent Contractors

Hospital employees and clinic staff generally receive standard W-2 income with taxes withheld. Locum tenens physicians, per diem nurses, and healthcare workers placed by staffing agencies may receive 1099-NEC forms as independent contractors, meaning they're responsible for self-employment tax and should make quarterly estimated tax payments.

Travel Nurses and Tax-Free Stipends

Travel nursing comes with a complex tax situation. Agencies often pay travel nurses a lower taxable base wage plus non-taxable stipends for housing and meals — but those stipends are only legitimately tax-free if you maintain a permanent tax home elsewhere that you return to. If you don't have a genuine tax home, the IRS may consider all your pay taxable. This is one area where consulting a tax professional who specializes in travel healthcare is worth the cost.

Unreimbursed Employee Expenses

Under current law (through 2025), W-2 employees cannot deduct unreimbursed work expenses as miscellaneous itemized deductions. If you pay for scrubs, licensure fees, CME courses, or professional organization dues out of pocket and your employer doesn't reimburse you, there's generally no federal tax deduction available. Ask your employer about setting up an accountable reimbursement plan.

Self-Employed Healthcare Workers

If you operate your own practice or work as an independent contractor, you can deduct: malpractice insurance, medical licensing fees, DEA registration, CME credits and professional conferences, medical equipment and supplies, home office or office rent, and business-use vehicle expenses.

Student Loan Forgiveness

Healthcare workers in qualifying public or nonprofit positions may be eligible for Public Service Loan Forgiveness. Additionally, National Health Service Corps awards and Indian Health Service loan repayments are generally excluded from taxable income.