If you are a clinician in private practice, you might receive a 1099 form instead of a W-2 this tax season. That means no employer is withholding taxes from your paycheck and thereby the responsibility falls to you. 

This can feel overwhelming at first, but once you understand how it works, it becomes a manageable part of running your practice. Here is a straightforward guide to help you navigate paying taxes as a 1099 provider.

What does being a 1099 provider actually mean?

When you are an independent contractor — meaning you set your own schedule, see clients under your own license, and are not an employee of a practice or organization — you are considered self-employed. Instead of having taxes automatically taken out of each paycheck, you are responsible for calculating and sending that money to the IRS yourself.

This applies whether you have your own solo practice, contract with group practices, or do a combination of both. 

Step 1: Understand what you are actually being taxed on 

One of the most common mistakes new private practice clinicians make is treating every dollar that comes into their account as income to freely use. A more accurate way to think about it: 

• The money deposited into your account is gross revenue — not your take-home pay.
• From that gross revenue, you subtract your legitimate business expenses (things like office rent, software, continuing education, and supplies).
• What remains is your net profit — and that is what you are taxed on.

Getting a solid accounting system in place early, however simple, makes this step much easier and can reduce what you owe at tax time.

Step 2: Know the two types of tax you owe

As a self-employed provider, you are responsible for two categories of tax:

Self-Employment Tax

When you are employed by someone else, your employer covers half of your Social Security and Medicare taxes. When you are self-employed, you cover both halves — which currently adds up to about 15.3% of your net profit.

The IRS does offer a small break to offset this: you are allowed to deduct half of what you paid in self-employment tax directly from your taxable income. In plain terms, that means if you owed $10,000 in self-employment tax, you can subtract $5,000 before the IRS calculates how much income tax you owe — so you are taxed on a slightly lower number. It does not eliminate the cost, but it does soften it.

Federal and State Income Tax

On top of self-employment tax, you also owe regular income tax based on how much you earn. The exact amount depends on your total income and filing status. You can use the IRS Tax Withholding Estimator to get a sense of what you might owe federally. If your state has an income tax, you will owe that as well — you can find your state's tax authority through the State Tax Agency Directory.

Step 3: Pay estimated taxes every quarter

Because no one is withholding taxes from your pay, the IRS expects you to make payments throughout the year — not just in April. These are called estimated tax payments, and they are due four times a year. Think of it like paying a bill in advance as you are essentially prepaying the taxes you will owe when you file your annual return.

The four payment deadlines are typically:

1. Mid-April (for January through March)
2. Mid-June (for April through May)
3. Mid-September (for June through August)
4. Mid-January (for September through December)

If you skip or underpay these, you may owe a penalty when you file, even if you pay your full tax bill in April. You can make these payments directly through the IRS website using their EFTPS system or the IRS Direct Pay tool.

Step 4: Set aside money every time you get paid

The most practical thing you can do is treat taxes like a non-negotiable expense. A common guideline is to set aside 25–30% of your net income in a separate account dedicated to taxes. This way, when quarterly payments come due, the money is already there waiting.

Many clinicians find it helpful to pay themselves a consistent amount each week or month — like a salary — and route the rest into separate accounts for taxes, business expenses, and savings. This removes the guesswork and keeps you from accidentally spending money that belongs to the IRS.

Step 5: Track your business expenses

Deductible business expenses directly reduce your taxable income, which means the more legitimate expenses you track, the less you pay in taxes. Common deductions for private practice clinicians include:

• Office rent or a home office deduction
• Practice management software and EHR fees
• Continuing education and licensing fees
• Professional liability (malpractice) insurance
• Phone and internet (business portion)
• Supervision and consultation fees
• Marketing and website costs

Keep a simple log or use accounting software to track these throughout the year so nothing slips through the cracks come tax season.

Do I need an accountant?

Not everyone needs a CPA, but working with one — especially one familiar with self-employed healthcare providers — can save you money and stress. They can help you decide whether to set up an LLC or S-Corp (which can reduce your self-employment tax), identify deductions, and make sure your quarterly payments are accurate.

Some clinicians find it worth consulting a CPA when they are getting started to ensure they have the right systems in place. 

The bottom line

Paying taxes as a 1099 provider does not have to be a source of stress. The basics are manageable: track what comes in and goes out, set money aside consistently, and make your quarterly payments on time. Do those three things and tax season becomes far less of a surprise.

The goal is not to become a tax expert — it is simply to have enough of a system that your finances are not running in the background as a source of anxiety. Most clinicians find that once it is set up, it takes very little ongoing effort to maintain.