Guide to Depreciation and Section 179 for Locum Tenens 1099 Physicians

How Depreciation Works for 1099 Physicians

Depreciation is a standard accounting practice that allows businesses to spread the cost of physical assets over their useful life. Instead of reporting the full cost of an asset upfront, businesses depreciate it over a period of time. For example, when a large company purchases a new warehouse for $10 million, it doesn’t have to report the entire cost immediately. Instead, it depreciates it over several years, which reduces taxable income year after year.

You can apply this same principle to your business expenses as an independent contractor. When you purchase assets necessary for your practice, depreciation helps lower your taxable income, saving you money over time. Here are a few common items that count as depreciating assets for locum tenens physicians:

• Work laptops and tablets
• Cars used to travel to assignments
• Home office furniture
• Personal medical equipment

This approach is constructive when making large purchases to support your practice over time.  For individual locums practitioners this is also beneficial, since W2 income does not allow for ANY deductions.  However, with accelerated depreciation options and Section 179 deductions for large assets (i.e. vehicles and equipment), individual practitioners can take advantage of lower taxes. 

Understanding MACRS: Your Go-To Depreciation System

To calculate depreciation, you need to understand the Modified Accelerated Cost Recovery System, the primary tax depreciation system in the US. The system offers two primary methods: 

• General Depreciation System (GDS): Applies to most assets; allows for accelerated write-offs in earlier years.
• Alternative Depreciation System (ADS): Used for certain property types like rental real estate, with longer depreciation periods.

Under GDS, you frontload more of the deduction in the early years, which is helpful if you want immediate tax savings. The asset’s “useful life” (e.g., five years for a vehicle) is determined by IRS guidelines. For many locum professionals, GDS offers more flexibility and upfront savings, but depreciation rules can be complex—working with a CPA ensures you apply them accurately.

Section 179 Deduction: Expense It All in Year One

Section 179 is the best option if you want to deduct the full cost of qualifying equipment in the year of purchase. For 2025, the maximum Section 179 deduction is $1.25 million. This applies to tangible personal property used more than 50% for business, such as:

• Laptops
• Office equipment
• Vehicles
• Business machinery

Example: If you buy a $1,000 laptop and use it 80% for work, you can deduct $800 in the same tax year.

A major advantage? Section 179 can also apply to financed purchases, meaning you can write off the full cost even if you haven’t paid in full yet.

Bonus Depreciation vs. Section 179: What’s the Difference? 

Bonus depreciation, also known as the additional first-year depreciation deduction, allows businesses to deduct a percentage of an asset’s cost upfront, regardless of how much it’s used for business.

Key distinctions:

• Eligibility is based on the purchase year, not business usage percentage.
• No annual cap, unlike Section 179.

Due to changes from the 2017 Tax Cuts and Jobs Act, bonus depreciation is phasing out. Here’s how much you can deduct based on the year of purchase: 

Bonus depreciation may be useful for large purchases, but due to its flexibility, Section 179 is the more practical option for most locum tenens physicians.

Depreciating a Vehicle: Two Methods to Choose From

As a locum tenens physician, one of the most common things you will claim depreciation on is your vehicle. There are two main ways to calculate vehicle depreciation: 

1. Standard Mileage Rate: Multiply your business miles by the IRS rate. For 2025, that rate is 70 cents per mile.

   • Example: 10,000 business miles = $7,000 deduction

2. Actual Expense Method: Track and total all vehicle expenses—fuel, insurance, repairs, depreciation—and apply the percentage used for business.
   • Example: If your annual car expenses total $12,000 and 60% of your driving is business-related, you can deduct $7,200.

If you frequently travel, the standard mileage method may be easier. But if your driving is limited and your expenses are high, the actual expense method might yield more savings.

Optimize Your Tax Strategy for Long-Term Savings

Depreciation and Section 179 can be powerful tools for reducing your tax bill—but only when used strategically. As a locum tenens physician, tailoring your tax planning to your specific needs and income patterns is critical.

At The Doctor’s CPA, we specialize in helping 1099 physicians build smart, customized tax strategies. Whether choosing between depreciation methods or navigating complex write-offs, we make saving more and stress less easy.

Let’s build a plan that works as hard as you do. Schedule a consultation today to get started.