Quarterly Estimated Taxes for 1099 Physicians
No employer is withholding tax from your 1099 pay — that job now belongs to you, four times a year. Here's how to get it right without overpaying or triggering a penalty.
By Sanjay Pamurthy, CFP® & Devin Talbot, MBA | Artham Advisors | July 2026
Quick Answer: If you earn 1099 income — locums, moonlighting, telehealth, consulting, or private practice — no one withholds tax for you, so you're responsible for paying it yourself in four installments: April 15, June 15, September 15, and January 15. To avoid a penalty, pay at least 90% of this year's tax or 100% of last year's tax (110% if your prior-year AGI was over $150,000), whichever is smaller. A simple rule of thumb: set aside 25-35% of every 1099 payment for combined federal, state, and self-employment tax.
Your Real Marginal Rate Is Probably Higher Than You Think
Most physicians know they pay 37% federal tax at the top. Fewer account for the layers stacked on top of it. The 3.8% Net Investment Income Tax (NIIT) applies to passive income — dividends, capital gains, rental income — for single filers above $200,000 and married filers above $250,000. These thresholds have never been inflation-adjusted since the law passed in 2013. The 0.9% Additional Medicare Tax applies to earned income above the same thresholds. The employer does not share this burden.
For a physician in California, New York, or New Jersey, state income tax adds another 9–13% on top. The combined marginal rate on investment income can reach 50 cents per dollar. This is the context in which every tax strategy below should be evaluated: every dollar you legally shelter is worth half a dollar or more in your pocket.
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1.
Why 1099 Income Needs Its Own Tax Plan
When you're paid as a W-2 employee, your hospital or practice automatically withholds federal and state income tax, Social Security, and Medicare from every paycheck. As a 1099 independent contractor — locums work, moonlighting, telehealth, consulting, or your own practice — none of that happens. The full amount you're paid is yours before tax, and you're responsible for sending the IRS, and usually your state, a share of it four times a year.
On top of ordinary income tax, 1099 income is subject to self-employment tax — the 15.3% that covers both the employee and employer share of Social Security and Medicare, which a W-2 job would otherwise split with your employer.
2.
Do You Need to Pay Estimated Taxes?
As a rule of thumb, if you expect to owe $1,000 or more in tax for the year after subtracting any withholding — say, from a W-2 job you also hold — the IRS expects quarterly payments. A useful shorthand: once your 1099 income climbs past roughly $20,000 for the year, start planning for quarterly payments. If your W-2 withholding alone already covers your total tax liability under the safe harbor rules below, you may not need to pay quarterly at all, even with meaningful 1099 income on the side.
3.
How Much to Pay: The Safe Harbor Rules
The IRS gives you a few different ways to avoid an underpayment penalty. You only need to satisfy one of them:
Safe Harbor | Requirement |
|---|---|
Any income level | Pay 90% of this year's actual tax liability |
Prior-year AGI over $150,000 | Pay 100% of last year's total tax liability |
Prior-year AGI $150,000 or less | Pay 100% of last year's total tax liability |
Simplest | Owe less than $1,000 after withholding and credits |
The cost scales gently with coverage: a $1 million policy often runs $150-300 a year, and $2-3 million of coverage typically costs $250-500 a year — a small price for the protection it buys.
Watch the timing: Penalties are calculated per quarter, not per year. Paying your full annual liability late in the year — even by December — doesn't erase a penalty for underpaying in an earlier quarter.
4.
How Much to Set Aside
A practical target for most 1099 physicians is to set aside 25-35% of net 1099 income for combined federal income tax, state income tax, and self-employment tax — closer to 35% in high-tax states, and lower in states with no income tax.
Self-Employment Tax Component | Rate / Threshold (2026) |
|---|---|
Deduction | Half of your self-employment tax is deductible from your income tax
|
Additional Medicare tax | Extra 0.9% on self-employment income above $200,000 ($250,000 married filing jointly) |
Medicare portion | 2.9% on all net self-employment income |
Social Security portion | 12.4% on the first $184,500 of net self-employment income |
LOWER YOUR BILL WITH RETIREMENT CONTRIBUTIONS: Contributing to a Solo 401(k) or SEP IRA reduces the income tax portion of your bill dollar-for-dollar, though it doesn't reduce self-employment tax.
CHECK THE QBI DEDUCTION: If your 1099 income falls below the phase-out thresholds, you may also qualify for the Section 199A qualified business income deduction. Physicians are classified as a specified service trade or business, so the deduction phases out at higher incomes — worth reviewing with your CPA.
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5.
How and When to Pay
Quarterly payments are due four times a year, and the periods they cover aren't quite even calendar quarters:
Payment | Covers | Due Date |
|---|---|---|
Q4 | Sep 1 - Dec 31 | January 15, 2027 |
Q3 | Jun 1 - Aug 31 | September 15, 2026 |
Q2 | Apr 1 - May 31 | June 15, 2026 |
Q1 | Jan 1 - Mar 31 | April 15, 2026 |
You can pay using IRS Form 1040-ES vouchers by mail, IRS Direct Pay, or the Electronic Federal Tax Payment System (EFTPS) online — most physicians find Direct Pay or EFTPS easier to track than mailing checks. Don't forget your state: most states with an income tax require their own quarterly estimated payments on a similar schedule.
Bottom line: Set aside 25-35% of every 1099 payment as soon as it arrives, base your quarterly payments on last year's tax return (bumped to 110% if your income is rising), and mark all four due dates on your calendar. Getting this right is mostly a matter of consistency, not complexity.
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Not sure you're setting aside enough for taxes?
Between locums shifts, moonlighting, and W-2 hospital pay, it's easy to underestimate what you actually owe — and penalties add up fast. We'll help you build a simple system to set aside the right amount, calculate your quarterly payments, and coordinate them with your retirement contributions. No products, no commissions. We are fee-only and fiduciary; we earn nothing from any product or referral tied to your tax planning.
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Frequently Asked Questions
Anyone who expects to owe $1,000 or more in tax for the year after subtracting withholding, including physicians with 1099 income from locums, moonlighting, telehealth, or private practice. If withholding from a W-2 job already satisfies one of the safe harbor rules, you may not need to make quarterly payments even with substantial 1099 income.
A common target is 25-35% of net 1099 income, covering federal income tax, state income tax (if applicable), and the 15.3% self-employment tax. The exact percentage depends on your total income, deductions, and state.
It's a set of IRS thresholds that, if met, protect you from an underpayment penalty. You can pay 100% of last year's tax (110% if your prior-year AGI was over $150,000), or 90% of this year's actual tax, or simply owe less than $1,000 after withholding — meeting any one of these is enough.
The IRS charges an underpayment penalty based on the shortfall for that specific quarter, calculated from the due date until it's paid. Penalties are assessed per quarter, so paying your full annual liability late in the year doesn't erase a penalty from an earlier quarter.
You can pay using IRS Form 1040-ES vouchers by mail, IRS Direct Pay, or the Electronic Federal Tax Payment System (EFTPS) online. Most physicians find Direct Pay or EFTPS more convenient than mailing checks. Check whether your state requires separate estimated payments, since most states with an income tax do.
Yes. Contributions to a Solo 401(k) or SEP IRA reduce your taxable income and therefore the income tax portion of your bill, though they don't reduce self-employment tax. Coordinating retirement contributions with your quarterly payment schedule is one of the simplest ways to lower what you owe.
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Disclosure: This article is for educational purposes only and does not constitute personalized financial, legal, or tax advice. Tax rates, thresholds, and due dates referenced here reflect 2026 figures and are subject to change; consult a qualified CPA or tax attorney about your specific situation. Artham Advisors LLC is a registered investment adviser (SEC disclosure). Registration does not imply a certain level of skill or training. Past performance is not indicative of future results. © 2026 Artham Advisors.