“You can get past the dead end. You can break through the ceiling. I did and so have countless others.”

Tax Benefits of the 1099 Nurse Write-Offs

One of my older mentors when I was finishing training whispered into my ear “utilize the power of the 1099 when you get out of school.”

At the time I did not really understand what he meant, but in my first few years of practice and being overwhelmed with income tax obligations it finally made sense. That’s what that old crazy ER doctor was getting at. Be a 1099 as much as humanly possible. The tax advantages are NUMEROUS.

Every single one of us has been a standard W2 employee at one point or another. That means that your employer automatically deducts federal income tax, social security tax, and Medicare tax from your paycheck each time. God forbid you live in a state that has state income tax as well…

If you have received bonuses you understand the gut wrenching feeling when you see 40% of it essentially fade away like a fart in the wind.

These things are not fun… These things are not FREEDOM. They are demoralizing, unmotivating and will be the BIGGEST EXPENSE OF YOUR LIFE.

Forget your mortgage or car payment. The biggest expense of your life will be taxes.

You need to focus on minimizing your tax bill as much as you legally can. We will not be discussing tax evasion. That is illegal.

The best way to do this is to be a 1099 contracted employee if you decide to work for others. So, what does this mean exactly?

If you are a 1099 employee, you have no taxes withdrawn from your paycheck. You are responsible at the end of the year to pay your taxes. Some of you might be thinking “well your tax bill at the end of the year is going to majorly suck!” and you would be correct thinking that.

I want you to think about it another way though. Instead, think to yourself “how can I lower the amount I have to pay back to Uncle Sam at the end of the year?”

The way you do this is have your 1099 checks made out to your personal limited liability company or LLC. You are not personally being paid; your LLC is being paid!

This business is responsible for covering all expenses that are necessary to operate it; which is you going out and doing contract work. You also should make it a legitimate business where you provide another service on the side as well. You could open a travel agency and see a couple clients a month. It literally can be whatever you want.

You need a vehicle, right? You also need gas and insurance. Plus, a cell phone. All these bills are legitimate business expenses therefore are paid for with TAX FREE DOLLARS.

The savings at the end of the year are HUGE. We are talking thousands of dollars saved.

Want to save for retirement? A self-directed IRA or 401k paid for by your company can result in significant retirement savings. The maximum contribution to a self-directed 401k is $56,000 a year compared to $18,500 for the W2 employee! This also lowers your taxable income.

These are the main advantages of being a 1099 employee vs a W2 employee. Therefore, it is paramount you negotiate being a 1099 during your initial hiring process.

Additionally, the savings to employers are huge. They no longer need to pay you benefits or payroll taxes. It really is a win win situation.

If you continue to work for someone try your best to negotiate it as a 1099 contractor. In my opinion, the best risk mitigating strategy for a nurse practitioner is to have a part time 1099 position and 2-3 side businesses. You can legally save tens of thousands in taxes every year not to mention the personal freedom that comes with this.

96 Responses

  1. Thankfully I caught on a few years ago after many years as a W-2. During the last presidential campaign I read that Bernie Sanders was in the 13% tax bracket. I had just lost 40% or more of a bonus. I thought “how is he in the 13% bracket and I am in the 38% bracket. Even as a senator he makes more than me!” I began researching and quit my W-2 employment to start my own humble corporation. I have an accountant who not only does my taxes at the end of the year, but also keeps my books and pays my taxes monthly. I save infinitely more paying her very reasonable fees than I used to pay in taxes. I also have the freedom to control my own work schedule. Love it!

    1. HOLY COW
      I already have a side business, EIN etc…. Who knew? I wanted to get back to it anyway. If already stated seeing up a page on Facebook to sell. You just inspired me!

  2. Great and interesting article. Where is the best (reliable) place to get information on being a 1099 employee and setting up your own LLC?


    1. Check out the rest of my blog! More articles to come. Setting up a 1099 and a LLC is fairly straightforward but I would love to assist you 1 on 1. Send me a message if you would like!

          1. I just started a 1099 position and need help on whether or not I should set it up as an LLC and if I need an EIN. Can you help?

        1. Hi Justin
          My name is Florence Soba Ajoku. I just discovered the Elite during my on how to start your own practice as an NP. I am very impressed and your position has been a tremendous help to me. I just accepted a position that is 1099 and I would be happier if you can explain more on what you mean to open a travel agency. The last time I worked 1099 the IRS about killed me with penalty.

          1. You can form a “business” that your 1099 is being paid through. That business could be a travel agency, car rental business, consulting business, whatever… Create a business, have business expenses, and you will find that your tax obligations decrease legally.

      1. interested-currently 1099 -want to better understand pros/cons of 1099 vs LLC; want to maximize tax deductions

    1. Essentially form a LLC and request to be 1099 from your employer. It is not very complicated but warrants a thorough discussion. I will consider writing a more detailed post about it in the future. I am always available for consultation if you would like one on one support.

  3. Hi there! I recently started a job for a Neurologist who is paying very low and he wants to make me FT and offer a salary. Still no word on how much. My Q is , how much per hour with 1099 is good and how do I negotiate bonuses and or payment as right now I am still learning the specialty . Shadowing half a day and seeing patients the other half and the pay per hour is quite low! I really have no idea how to go about this. My friend sent me your website. Thank you

    1. Lycia,
      To make a 1099 position worth it, you need at least $80 an hour. Consider a 100% production based salary though. Ask the neurologist that you want to be paid production at $40 per RVU. This way you are paid for the work you do. Make sure you have an LLC the 1099 is paid to as well. No benefits, no bonuses, just straight up production.

      1. Thank you , I think for now I’m in a bad deal , but will certainly negotiate for Jan!! Thank you so very much. Is there a way to delete this ??

        1. Hi ,
          In the state of TX, do we sign up as a standard LLC or a professional liability? No other employees but myself. Any help in this would be gladly appreciated. Thank you

          1. Hi Justin! Extremely clueless!! Please help…I started the process with Legal zoom, but stuck at Standard or Professional liability ? what do I need for TX. where do I find it out? do I need to have an attorney ??

          2. First off, STOP WITH LEGAL ZOOM RIGHT NOW. It is a rip off. Check out the secretary of states website in Texas, there should be an online system where you can register for a LLC for a fraction of the cost.

  4. You speak the wisdom. I’ve had my own LLC as an NP Independent Contractor since 2016 – in a conservative state where NPs do not have Full Practice Authority (FPA). I target independent practices in rural areas (they are always struggling to keep their head above water, and I love rural medicine).
    My biggest hurdle is not the lack of FPA, but rather, MDs who don’t understand the concept; how can a NP in a restricted state do this? Or (ahem) how can a female NP in a restricted state do this?

    1. You must find a MD collaborator then who will be employed by your LLC that you pay monthly to be your “supervisor.” This would then allow you to practice throughout the state without issue.

  5. Great Info, much needed as well. Would you consider rephrasing your sentence “being raped by taxes”? I understand the sentiment you are trying to convey but have come to realize that using phrases like “raped” out of the appropriate context is demeaning/invalidating to some. Thanks!

  6. I have seriously been looking for information like this!!! Start a you tube channel! I love that platform. 🙂 I’m in several FIRE groups and graduate with my FNP in May so I’ve been brainstorming all the ways to set myself up for a life of FREEDOM! Your site has inspired me so much. Thanks for all the content! My mind is buzzing.

    1. Glad to help Charity! I will be releasing the Elite NP Model book in the coming month. Stay tuned! It would be extremely beneficial for the new graduate NP.

  7. Hello and thanks for the great information. I would like to ask you a question regarding new graduates and what a contract should look like. I just passed my certification fot PMHNP in California and have been offered a job (verbally) that will potentially be paying a 70/30 spit in my favor but absolutely no benefits. Is this a good deal?

    1. Very good deal. Make sure they pay you as a 1099 while you earn the 70% of collections. Get your LLC started asap and have the checks written out to it. You can purchase your own benefits without an issue with the potential money you will be making!

  8. Can you switch to an LLC at anytime with the same employer if you started off with your SSN? Also LLC in California is like $800 a year. I wonder if s-corp is better. P.s- I love your blog. What a gem.

    1. Yes, just ask them to switch to your LLC. It shouldn’t be an issue what so ever. Screw CA… It is the tax hell of the planet. Start the LLC in Wyoming and open the LLC bank account in Wyoming. All the money is WY. CA can’t touch it if your smart about it. An S-corp is not necessary if you are utilizing every tax deduction you can through your business. If you are paying yourself a salary through the LLC, then yes, elect as an S-corp so you can take out profit at a 15% tax rate.

      1. Thank you so much for replying. I’m not sure I quite understood the Wyoming bit. So if I opened an LLC in WY, how will I operate with it in CA? Also, I was under the impression everyone pays themself through their LLC, I mean how else will they get the $$ they earned? I wish I could sit with you for an hour or something lol. I am really a novice when it comes to all this tax business & I am a relatively new NP desperately trying to be like our physician counterparts and I have realized working full time for one employer just isn’t going to cut it so coming across your blog is a big blessing. You’re absolutely right abt CA being a tax hellhole but I unfortunately can’t move at the moment, as this is where family is, so in the meantime, I’m just trying to find ways to reduce the insane tax burdens in order to be able to comfortably afford CA’s insane COL and with its new AB5 law, getting an LLC or an S-corp (still don’t know which is better) has definitely gone from being a long term goal to a short one.

        1. These are a lot of important questions and points you make. I do offer one on one consultations to help direct you with getting started.

          1. Your LLC is in WY. This is where your holding company is. You simply have an operating LLC in CA and then transfer all earnings to the WY LLC where they are sheltered from California’s bullshit. You can discuss this with an attorney on how to set it up. Very easy.
          2. Yes, you are paying yourself from the LLC, but with a business, your key tax savings come from expenses being paid through the business. Therefore, how you are being paid is negligible unless you are making significant profits. Which is why I advocate for having multiple small side businesses.
          3. Make a plan to get the hell out of California as soon as possible. That place is a shit hole and is getting worse year by year. For the 1500 sqft house you would get in CA with $600,000, you could buy a mansion and 100 acres in other parts of the country for cheaper, plus make more money.

  9. I am so happy that I came across your blog. This information is gold! Oh behalf of all Nps, thank you! The reason why I even started this search is because I got offered the opportunity to do SNF visits based on RVUs. It is a small company that is just starting off. They seem very open to negotiations. Now I am thinking of offering to do it as a 1099. Do you have any suggestions as far as a good starting point for pay? Would 70% of collections sound too greedy?

    1. 70% is totally reasonable. Now, if they want to pay you based off RVUs, the most important thing to do is negotiate the rate of the RVU. $35-40 per RVU is reasonable and profitable if you are productive. I work at $32 per RVU at an urgent care and I absolutely ill it. Check out this article.

    2. Hello,

      I’m a new grad NP in California and a potential employer is offering 45% collections with no benefits as a 1099 employee. To me, it does not sound like a great offer but I’m new at this and do not know what is reasonable pay as a new grad. Any input is much appreciated.

  10. Justin,
    I will back up your statements about LLC’s to the end. I’ve had my own side gig since I graduated…and work for a big hospital system. I’m going to think about becoming a 1099 with them. It may not fly with them but I use them essentially for insurance while I get my side hustles to pay for retirement, cars, mortgage, etc…Love the tax advantages of my own business. I actually talk about this a lot with new NP’s as well as some of the more tenured ones.
    Keep up the great work

    1. Agree 100% brother. Keep trucking on with your side business, it is the only way to get ahead in this world now a days.

  11. I so appreciate all this information. I have agreed to do 1099 work doing telemedicine for a company. They want me to have an LLC. In Arizona, do I need a PLLC or is an LLC fine. Ispf it makes no difference, is there an advantage of doing one over the other? Thank you!

    1. There really is no advantage of doing one over another. Some states require professionals to have a PLLC. I would recommend forming the LLC in Wyoming as it is cheap and offers some great corporate protections. You don’t need to have an LLC in the state you live in if you are doing 1099 work. Check out this article.

  12. I am so happy I came across the blog. I am a 1099 employee and am only receiving $30 per patient with a slow start. I just started but when I interviewed and they stated it was a 1099 position I specifically asked if I should open my own company to help with taxes. I should have known I would not be told the truth. I am going to look into starting a LLC in Wyoming as you suggested Justin. Since I am in Indiana will I need to open a company under the Wyoming company? Will the Wyoming company be an umbrella company?

    1. Yes, form the LLC in WY and then a foreign LLC in IN owned by the WY LLC, you will need to do this because you will need to pay taxes in IN through the LLC. If you plan on opening a business later, you will already have the LLC set up and functioning!

  13. Thank you Justin for all the knowledge here. I already have a full time W2 job. A physician asked me to help out seeing patients in Subacute rehab and LTC facilities on a few days a week and has offered me a 1099 position paying $45 per hour in Illinois. Expectations are 4 follow up patients per hour and 2 new admits per hour. I would like your input and any advice you can give me. Thank you very much.

    1. Karen,

      I will be perfectly honest with you, that physician is robbing you blind at $45 an hour… I wouldn’t do that for less than $100 an hour as a 1099. I would seriously advise you to AVOID that deal or renegotiate that hourly rate.

  14. I have been offered a 1099 FNP position. I have always been a W2 employee. However, I do have a sole propertiship as a travel agent. Can I make an LLC and it cover both NP and travel agent, paying myself from different divisions of the LLC?

    Or do I need to form a new LLC to cover both areas?


    1. Hi Margie,

      Honestly, the travel agent gig is practically zero liability, so I think functioning under one LLC is fine.

    2. Hi NP colleagues, I have decided to give the 1099 a try. Would anyone have a draft/template of an operating agreement, so I can have an idea how to create one. I would greatly appreciate it.

  15. Some great info, love this site. I do have a question and happen to live in WY. I am purchasing a practice and the plan is a transfer of an already established LLC. Would I set myself up with a 1099 to pay myself?

    1. TJ, that is unnecessary to pay yourself as a 1099. The LLC is just a pass through entity, so ultimately at the end of the year, your tax obligations will still be the same. Just pay yourself a reasonable salary and take out the rest as a dividend payment. Your accountant will help you set that up!

  16. Hi Justin,
    I am new grad FNP, offered a 1099 position to see patients with a MD at SNF, they are offering 40% of the revenue. Is it too low ? I am not sure.

  17. Hello Justin,
    I graduated in May (previous degrees teaching HS for 11 years), and have been offered a PMHNP 1099 contract for a small rural mental health clinic in IN. It is a 60/40 split in my favor, but I will be the very first prescriber that this clinic has ever had. The counselors/therapists also operate on a 1099 60/40 split. I have already set up an LLC, and invested $10,000 in myself/my business through applications, insurance, testing reviews, testing, computer, supplies, etc… The HSPP therapist that owns the practice has never been medical, and is has no clue how to set up a clinical patient process so this task has fallen on me. After consulting PMHNPs on various blogs, I was told working for anything less than 70/30 would be a waste of time. I feel I am entitled to an increase after a year or a start-up bonus at least. In a year, he has plans to hire another PMHNP, and it is assumed I would be orienting her. I will already have laid the ground work. This really runs me the wrong way-she will START at the same split I am expected to work on for HALF the start-up work involved. Am I being unreasonable? What are your suggestions? I am so glad I found you on here!

    1. I don’t think it is unreasonable. 60/40 is pretty reasonable. You will make a lot of money. Trust me on this. I would voice your concerns with them about how you are going to help them setup the practice yet pay this other person a year from now the same amount. Tell them you want an 80/20 bonus for the first 3 months as you are dedicating a lot of time setting this up.

  18. Hi JustinAllan,

    How can I have a one-on-one consultation with you regarding a 1099? I am completely lost. I was offered a W2 or 1099.

  19. I recently left a practice after being a new nurse practitioner of 10 months. The focus was weight loss clinic/endocrine. I was offered a 1099 position 50/50 split. I will be practicing with a similar focus of weight loss and treatment of obesity related conditions at a sports medicine physician’s practice that just opened in the last few months. It is direct primary care. So, NO insurance. There will be no additional staff. There will be no medical assistant, nurse, staff for billing, etc. According to her spread sheet, her break even point is at 6 patients/day (4 day/week). I feel I should at least negotiate 40% after 6 patients. Please advise.

    1. I guess I am confused. I thought it was 50%? I think 6 patients per day sounds about right for a break even number. So anything after the break even point is then split at 50%?

      1. Yes. She will take 50% regardless of how many patients I see. She is paying for my malpractice. I will be charging weight loss patients $100/mo for subscription model and $125 for non-subscription. There will be an additional charge for management of obesity related conditions. There will be additional charge for weightless meds/supplements. After taxes (1099), I’m probably only taking home 20%. After her break even of 6 patients, I feel I should be able to have a higher percentage. I have only been NP for 10 months. So maybe 50% is reasonable? What’s your opinion?

        1. You need 50% of NET REVENUE. No exceptions. She gets 50% and you get 50% of NET REVENUE. I wouldn’t do it for any less. At the end of the day, she needs you more than you need her. Start your own thing if you must. Do not get taken advantage of here. Too many NPs except peanuts for what they produce.

  20. She is offering me 50/50 split. I just think after 1099 taxes, it leaves me with about 20%. Should I ask for a 60/40 split in my favor for after seeing 6 patients/day? I will have no staff. She will be paying for my malpractice. For weight loss, I will be charging $100 subscription for members + a charge for supplements and $125 for non-subscription members + supplements. If patients want me to manage obesity related conditions, there will be an additional charge.

    1. Malpractice is a whopping $3k a year, big deal. It is just a drop in the bucket and is nothing in the grand scheme of your business expenses. You cannot account for taxes with this. We all must pay taxes at the end of the year. It should be a straight 50% of net revenue.

      1. Thank you for your feedback! I really want to start my own but I am still on the fence of starting my own since I have only been an NP for a little under a year.

        1. Focus on low liability services. All of the courses we have about niche services are generally low liability services. IV infusion, weight loss, even HRT is pretty straight forward and does not require a lot of experience.

  21. what about being a massage therapist making 40+ an hour? would it be beneficial to open an llc and get paid through it?

  22. I am currently working as a psychiatric NP through a recruiting agency for a state hospital in RI, as a 1099 employee. What is the process in setting up an LLC, and what is S status? I have tried to educate myself by finding info online but am still confused. I live in MA. I started in January 2022, and am making $100/hr, as I just got a raise from $85/hr. I could probably make more if I got the middle man out and negotiated with the hospital directly, your thoughts? My taxes will be exorbitant if I don’t do something soon. I’ve been tracking mileage and expenses (office supplies). 121 miles/day. Please advise. Thank you so much, Maggie

    1. Maggie,

      Read these articles:
      Step by Step Guide on How to Create a Business
      How to Pay Yourself Through Your LLC
      Employment Taxes for the Nurse Practitioner Entrepreneur

      Yes, you need to negotiate with the hospital and cut out the shark middle man.
      You need to develop a tax strategy NOW… Do not wait until the end of the year. You must be actively decreasing your taxable income throughout the year and this is done by having a business. All of this is discussed in great detail in our tax lowering course: https://courses.elitenp.com/p/the-how-to-lower-your-taxes-course

  23. Hello Justin , really great article you have here thank you very much . I need your advice, I recently just received 2 job offers as a new psych NP . One is offer 70/30 in my favor while the second is offering 80/hr. I’m conflicted on which one is a better offer

  24. Hi Justin!

    When you say have the 1099 pay to your LLC… I have an LLC for my side gig. Any revenue goes into a business checking account set up with the LLC EIN. Is that where the 1099 would also deposit? Or do I need a DBA with a separate business checking account?

    Thank you!

  25. I am considering taking a nursing position for $40 an hour while I build my NP mental health side practice. Just for steady income. I saw in another comment that stated becoming a 1099 versus W2 is not worth it unless the hourly rate is $80. Please advise.

    Thank you!
    Regina NJ

  26. Hi Justin,
    I’m an RN newly hired to be the Weight loss, injections and IV hydration nurse in a Cryotherapy/light/frequency Rejuvenation location.
    I’ll be paid 1099 do I need an LLC? E&O insurance? Malpractice insurance? I’m not sure if I’ll have a private side business later or not, I’ve been disabled for 6 years and decided to do this after Cryotherapy helped drastically reduce my brain fog and body pain. Hopefully I can start a side business but I want to be prepared. What do you recommend?

    1. Yes, form an LLC and have it paid. The business you are working for should provide you malpractice coverage, so be sure to verify that.

      1. The company will not be covering me with Malpractice they’re not medical, do I need my own? Or would E&O be better?

          1. I was told the company we signed up with Guardian Medical to supply our Medical Director and Medical liaison (who are both Dr’s) would provide Malpractice and I will not have to get it because we are covered. I’ve been a nurse for over a decade and I’ve never had it, any facility I worked at told me it wasn’t necessary. Did something change?

  27. I am a PNP and after 12 yrs of traditional medicine and W-2 employment, I am now embarking on functional /integrative medicine. I have been approached by a NP to join her as a 1099 part time for now.
    are you saying I should go ahead and make a PLLC since she wants me to be a 1099 employee?

    one of my eventual goals would be to have a PLLC to see autistic and developmentally delayed children, and those with asthma and to treat them functionally.

    So if I understand you correctly, I could see pedi patients at her clinic using my PLLC. But I could also see my own patients away from her clinic that get referred to me by other providers through this same PLLC that I create. IS that correct?

    Should I get a lawyer to set this PLLC up for me so that I can do both, my own private practice and be a part time contract NP? thank you.

    1. Yes, form an LLC/PLLC if working as a 1099. You can work as a 1099 through it and operate a business out of it. Just go through an LLC creation service. I wouldnt waste money on a lawyer for it

  28. I currently work as a PMHNP W-2 employee and want to switch to a 1099. I already have my own insurance, malpractice, and do not receive benefits. I set up my own LLC with the name of my future business; however, it will be clear to him that I plan on jumping ship if he sees the name of my LLC. The owner is well known in the state and active on many state psych boards and committees and I do not want to take the chance of loosing steady income while getting my side business started.

    Could I set up a generic DBA under that LLC and list the DBA name on the 1099 instead? Do you know if I would have to list the EIC on the form? Just thinking he could look that up and find out the real LLC name and then all hell breaks loose. Any advice is appreciated. Thank you for all your help.

  29. I’m a new PMHNP in the state of Florida and don’t know the best way to maximize my income. I want to work remote/telehealth in various states. After establishing a LLC in Wyoming, how do maximize tax savings since I live in Florida which is a no state tax state? I currently have a full-time W-2 position as a nursing faculty. However, I want to be paid 1099 for my PMHMP work because I won’t need the benefits. Lastly, is it a better idea to leave the teaching position because it only pays $50 an hour and get a full-time W2 PMHNP position with additional 1099 positions to maximize earnings and tax savings? I apologize for so many questions, but this is a great forum and I really appreciate your advice. What is an acceptable starting salary that I should expect for a new PMHNP? Thank you!

    1. Starting rate is going to vary state to state… I personally wouldnt do it for less than $75 an hour as a new grad

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