I'm an employed physician doing locums or expert witness work on the side. What taxes do I owe?

Locums shifts, chart reviews, and deposition fees are usually paid on a 1099. Nobody withholds tax from those checks, so the whole bill is yours to cover. You owe federal income tax, self-employment tax, and in most cases state income tax on the net profit after expenses.

Income tax is the biggest piece. Side income stacks on top of your salary, so every dollar is taxed at your highest bracket. For most employed physicians that means 32% or 35% federal, plus state.

Self-employment tax is 15.3% on net earnings, calculated on 92.35% of your profit. That rate has two parts. The 12.4% Social Security portion only applies up to the 2026 wage base of $184,500, and your W-2 wages count toward that limit first. If your salary is already above $184,500, you skip the Social Security portion on your side income entirely. You still pay the 2.9% Medicare portion with no cap, plus an extra 0.9% Medicare tax once combined earnings pass $200,000 single or $250,000 married filing jointly. Half of your self-employment tax is deductible.

Here is how that looks in practice. Say you earn $300,000 in W-2 salary and net $50,000 from expert witness work. Your Medicare tax on the side income comes to about $1,750. Federal income tax adds roughly $16,000 to $17,500 depending on your bracket. Add your state and you are near 40% of that profit. If you work part-time or your salary is below the wage base, the Social Security portion kicks in on the gap and the total goes higher.

State taxes get more involved with locums. Working an assignment in another state usually means filing a nonresident return there. Your home state generally gives you a credit for tax paid elsewhere, but you still have to file both.

You can pay through quarterly estimates due April 15, June 15, September 15, and January 15. The other option is a new W-4 at your main job that raises your withholding. Withholding is treated as paid evenly through the year, so it can fix a shortfall even if you realize it in November. If your adjusted gross income is over $150,000, paying in 110% of last year’s total tax keeps you clear of underpayment penalties.

Expenses lower the profit you are taxed on. Common deductions include licensing and DEA fees for states where you work, credentialing costs, CME your employer doesn’t reimburse, malpractice premiums you pay personally, and unreimbursed travel to assignments or depositions. A home office counts if you use the space regularly and only for the side work, such as reviewing case records. Run everything through a separate account so the records are clean.

Side income also opens up a solo 401(k). Your employee deferral limit is shared with your main job’s plan, but employer contributions from your own business are a separate limit and can shelter a meaningful amount.

Marc Eastin, our Chief Information Officer, is a practicing neurosurgeon, so we know this setup from the inside. Our Side-Income Package for Employed Physicians covers the bookkeeping, quarterly estimates, and returns for this income for $3,000 to $4,800 a year. If your situation is broader, our tax services for physicians can look at the full picture, including whether an entity makes sense as the side work grows.