When you work a full-time nursing job, the benefits and limitations are pretty straightforward. You receive a W-2, benefits, and have your taxes deducted by your employer. You also adhere to specific schedules as determined by your employer and do as you are directed. Using a platform and app such as Praos for per diem work, you choose when, where, and for whom you want to work. The choice is completely yours. Praos does not control what type of work or how you do it, or whom you should choose to work for, and for how long. We simply make available opportunities that suits your skills. You are your own boss.
Read through the FAQ below if you’re considering freelancing for work-life balance or flexibility reasons or wanting to work outside of an agency.
Remember that the information provided here is a set of general guidelines. Always consult with your accountant or tax professional before making any decisions about your taxes.
What’s different about contracting, tax-wise?
As an independent nurse, you do not receive a W-2 from us or the facilities at which you work — even if you’ve put in the equivalent of full-time hours. What that means for you is that:
- You do not get taxes deducted from your pay by Praos or by the facilities you work for.
- You must consult with your tax professional to ensure you make timely and accurate tax payments.
- Per IRS guidelines you may need to pay your quarterly estimated taxes.
- After you earn $600 with Praos, you’ll need to submit a form W-9 to Praos.
So, what’s a W-9?
It’s the closest thing to a W-2 in the contracting world. Just like the W-2 you fill out upon hire at a full-time job, you fill out a basic form (that looks like this) in order to work with Praos. It provides us with crucial information that we are legally obligated to report to the IRS, such as your name and address and your tax ID.
We keep track of how much you make with Praos. After the end of the year, you’ll receive a form 1099-MISC from us detailing that income. You must provide that form to your tax professional when it’s time to complete your taxes.
What’s great about working with Praos is that you get one form 1099-MISC for all shifts you complete through through the Praos app in a given tax year — instead of a form from each organization you contract with.
What does the IRS quarterly estimated taxes involve?
We have provided this from the IRS website. It might be best to consult with your tax advisor to assess your situation.
Estimated tax is the method used to pay Social Security and Medicare taxes and income tax, because you do not have an employer withholding these taxes for you. Form 1040-ES, Estimated Tax for Individuals (PDF), is used to figure these taxes. Form 1040-ES contains a worksheet that is similar to Form 1040. You will need your prior year’s annual tax return in order to fill out Form 1040-ES.
Use the worksheet found in Form 1040-ES, Estimated Tax for Individuals to find out if you are required to file quarterly estimated tax.
Form 1040-ES also contains blank vouchers you can use when you mail your estimated tax payments or you may make your payments using the Electronic Federal Tax Payment System (EFTPS). If this is your first year being self-employed, you will need to estimate the amount of income you expect to earn for the year. If you estimated your earnings too high, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter. If you estimated your earnings too low, again complete another Form 1040-ES worksheet to recalculate your estimated taxes for the next quarter.
Does being a healthcare contractor cost money?
No. You might pay for more out of pocket in taxes than you do as an employee. But, generally, you can write off most to all of those expenses as business expenses.
What does that mean?
Qualifying business expenses reduce the total amount of your taxable income for the year (and, thus, the amount of taxes you must pay). So, if you make $20,000 this year as a nursing contractor and have $2,000 in expenses, your taxable income will be about $18,000 (depending on the types of expenses).
Note: Some expenses can only be claimed in part, meaning that the amount they reduce your taxable income is not equal to the amount you spent on them. This may include meals and gas mileage. As always, ask your tax professional about the implications of your specific expenses.
How and what can I claim as expenses?
Use the IRS Form 1040-C to claim business-related expenses for any contract you take through Praos. That includes:
- Transportation costs (like gas)
- Tools needed to complete your job
- Continuing education courses
- Health insurance
- Liability insurance
- Costs associated with maintaining certifications
- Any costs associated with a home office, if applicable (WiFi for finding shifts or a portion of the cost of your phone plan, for example)
Still have questions?
That’s okay! Let us know what you’d like to learn and how we can make your career as a healthcare contractor easier.
You can also browse the IRS website for tax information. We encourage you to connect with your accountant to ensure you’re getting the most financial gain out of your work.