Most physicians taking locum tenens assignments write off their mileage wrong. Their accountants let them get away with it, until the audit letter arrives.
There is a pervasive myth in hospital call rooms that the moment you turn the key in your car to drive to a locum shift, every single mile and meal automatically becomes a tax deduction. It sounds great over coffee. It fails spectacularly under Internal Revenue Service (IRS) audit scrutiny.
This article is for educational purposes only. This content is not financial advice, not legal advice, and not tax advice. Real-world figures vary based on your specific practice setup, so always consult a qualified professional before filing.
The 'Job Expense' Myth: Why Locums Are Not Just Day Jobs
Let's clear up the biggest misconception right out of the gate: the IRS does not care that your locum travel feels like a business trip.
(For more on managing non-vehicle deductions, see Resident Side Gigs: Setting Up an LLC and Handling 1099 Income for strategies on structuring your business entity.)
Under Internal Revenue Code (IRC) Section 162(a), ordinary commuting, driving from your personal home to your regular place of work, is never deductible. Zero dollars. It does not matter if your commute is five miles or five hundred miles. If you drive from home to a facility where you regularly work, that's a personal commuting expense in the eyes of tax law (Commissioner v. Flowers, 326 U.S. 465).
(Be aware of these pitfalls, as outlined in The Moonlighting Tax Missteps That Turn Extra Pay Into Extra Pain.)
Tax court dockets are littered with doctors who claimed thousands in mileage because they viewed every locum gig as a "business trip." The IRS triggers audits on these claims because physicians routinely confuse a temporary assignment away from home with a new commuting routine.
If you take a 6-month locum contract at a regional hospital and have no other principal place of clinical practice, that regional hospital is your temporary workplace. But if you have no permanent tax home elsewhere, driving there is simply commuting to work.
What about employment status? Conventional wisdom says W-2 locums can't deduct anything anymore thanks to the Tax Cuts and Jobs Act (TCJA), which suspended unreimbursed employee expenses. That's largely true for employee commuting. But if you maintain a permanent, primary W-2 workplace and take temporary, short-term W-2 shifts elsewhere, employer reimbursements for those travel costs can still be excluded from your taxable gross income under an accountable plan. For 1099 independent contractor locums, qualified travel expenses remain fully deductible on Schedule C, if you clear the hurdle of establishing a legitimate tax home first.
Step 1: Establishing Your Tax Home (It's Not Where You Live)
Your tax home is not where your spouse lives. It is not where your kids go to school. It is not the address printed on your driver's license.
The IRS defines your "tax home" as the general area of your main place of business, employment, or post of duty, regardless of where you maintain your family home. If you live in San Diego but earn 90% of your clinical income doing back-to-back locum shifts in rural Ohio, guess where the IRS considers your tax home? Rural Ohio.
When you have no single principal place of business, the IRS applies Revenue Ruling 73-529 using a strict three-factor test to determine if you actually have a tax home:
- You perform part of your business in the vicinity of your claimed main home and use that home for lodging while performing business there.
- You maintain duplicate living expenses at your main home while away on business.
- You have not abandoned the area of your historical main home, members of your family reside there, or you use it frequently for lodging.
Fail all three? You are legally classified as an "itinerant worker." An itinerant worker's tax home travels with them wherever they go. The result? You are never "away from home" for tax purposes. Every hotel bill, meal, and plane ticket becomes a non-deductible personal expense.
I've seen docs lose tens of thousands in deductions during audits because they owned a house in Austin but worked 48 weeks a year in North Dakota without doing any income-producing work in Texas. To claim "away from home" deductions under IRC §162(a)(2), you must maintain a main place of business elsewhere, and your locum assignments must be realistic in expectation and actual duration to last less than one year (Rev. Rul. 93-86).
The Meal Trap: Per Diem vs. Actual Costs (What Actually Saves Money)
Physicians love tracking every $14 airport salad receipt. It makes them feel like savvy business owners. In reality, it's administrative self-flagellation.
When traveling away from your tax home overnight for a locum assignment, meal expenses are subject to the standard 50% disallowance rule under IRC §274(n). You only get to deduct half of what you spend.
Here is where the crowd gets it wrong: independent locum contractors (1099) aren't required to hoard faded shoe boxes full of dinner receipts to claim meal deductions. The IRS allows self-employed taxpayers to use the federal CONUS (Continental United States) standard meal allowance per diem rates for the locality of travel, rather than tracking actual costs.
Look at the math. If you spend $50 a day eating cheaply while working in a high-cost area where the federal per diem meal rate is $79, using actual receipts nets you a $750 deduction on a 30-day assignment ($1,500 total spending x 50%). Using the federal per diem rate nets you a $1,185 deduction ($2,370 rate x 50%), without needing a single meal receipt. You saved time, avoided receipt-tracking overhead, and gained a larger deduction legally.
And no, eating a lunch at your desk during a local shift at your home hospital does not qualify as a business meal expense. Working through lunch isn't a taxable fringe benefit or a business write-off. Unless you are overnight away from your tax home on a temporary assignment, your lunch is just lunch.
Travel & Lodging: The 'Family Factor' Fallacy
"I can't write off my locum condo because my spouse came along."
I hear this misconception constantly. Doctors assume that if their family accompanies them to an out-of-state locum assignment, the entire lodging and vehicle write-off vanishes. Wrong.
If you hire a rental car or rent an apartment for a legitimate 3-month locum assignment away from your tax home, the cost of that lodging and transportation is full price whether your spouse is sitting in the passenger seat or not. You deduct the price of what a single worker would reasonably require.
What you cannot deduct is the incremental increase in cost caused by your family. If a single-bedroom corporate apartment costs $2,500 a month and you upgrade to a three-bedroom house for $4,000 a month so your kids can join, your deduction is capped at $2,500. Their airfare and meals are personal expenses. Your underlying lodging remain valid business expenses.
The IRS disallows luxury or lavish lodging expenses under §162(a)(2), but "reasonable and necessary" lodging matches local market conditions. Stop feeling guilty about claiming legitimate lodging costs on out-of-town assignments. You aren't taking advantage of a loophole. You are recouping involuntary expenses incurred directly to earn taxable clinical income.
Agency Fees & Licensing: The Hidden Write-Offs Most Miss
While doctors obsess over mileage apps, they routinely ignore non-vehicle statutory write-offs that require zero mileage logs to defend.
If you are working 1099 locums, every expense required to maintain your ability to practice across state lines is an immediate, ordinary, and necessary business expense.
Here is what gets left on the table:
- State Medical Board Licensing Fees: Fees paid to obtain and maintain licenses in secondary states specifically for locum work.
- Targeted DEA Registrations: State-specific DEA registration fees required for prescribing in contract locations.
- Malpractice Tail Coverage: Tail or nose coverage premiums paid out-of-pocket that are not covered by the staffing agency.
- Maintenance of Certification (MOC) and Specialty Boards: Board renewal costs directly tied to maintaining agency credentials.
The critical mistake here is commingling. Do not pay these expenses out of your personal checking account alongside your grocery bills. Maintain a dedicated business bank account and credit card for all locum activity. Mixing personal expenses, academic research fees, and 1099 locum expenses in a single account is an invitation for an IRS agent to disallow the whole bundle during an audit.
To audit-proof your claims, keep a log containing three basic elements: contract agreements proving the assignment was temporary (<12 months), proof of a permanent tax home base, and contemporaneous mileage or lodging documentation.
Summary Checklist for Locum Vehicle & Travel Deductions
To secure your tax position and stop guessing, run every expense through this basic reality check:
- Tax Home Status: Do you have a permanent, ongoing principal place of business where you earn income and incur expenses when not on locum assignments? If no, you are an itinerant worker and travel deductions are off the table.
- Assignment Duration: Is the locum gig realistically expected to, and does it actually, last less than 365 days? If it crosses a year, it ceases to be temporary, and deductions end immediately.
- Calculation Method: Are you using CONUS per diem meal rates to minimize receipt tracking while maximizing legitimate statutory allowances?
- Proportionate Expenses: Have you removed incremental family travel costs while retaining the baseline deductible expense for your own travel and lodging?
- Separate Entities: Are all business-related licensing, vehicle expenses, and travel costs funneled through a dedicated business account to avoid commingling flags?
