1099 vs W2 for Locum CRNAs

The Short Answer

1099 locum CRNAs typically earn 15–25% higher gross hourly rates than W2 employees. But after self-employment tax, health insurance, retirement contributions, and business expenses, the gap narrows significantly. In most cases, 1099 still wins — but only if you structure it correctly.

The real question isn't “1099 or W2?” — it's “1099 as a sole proprietor or 1099 through an S-Corp?” That decision alone can save you $10,000–$20,000 per year in taxes.

The Tax Math

Here's a realistic side-by-side comparison for a locum CRNA working 40 weeks per year, 40 hours per week:

In this scenario, the 1099 CRNA takes home about $21,500 more per year. But that advantage depends heavily on the rate differential — if 1099 rates are only 10% higher instead of 20%, the gap shrinks to near zero.

The S-Corp Advantage

As a sole proprietor 1099, you pay 15.3% self-employment tax on all your net income. An S-Corp lets you split income between a “reasonable salary” (subject to FICA) and distributions (not subject to FICA). At CRNA income levels, this typically saves $8,000–$20,000 per year.

The tradeoff: S-Corps cost $1,500–$3,000/year in accounting and filing fees, and you need to run proper payroll. Most locum CRNAs earning over $200K find it worth it. Talk to a CPA who works with healthcare professionals — this is too consequential to DIY.

What W2 Gives You That 1099 Doesn't

The rate comparison doesn't capture everything. W2 employment typically includes employer-paid malpractice insurance, health/dental/vision benefits, CME allowances and paid time off, 401(k) matching, workers' compensation coverage, and unemployment insurance eligibility. These benefits can be worth $20,000–$40,000 per year depending on your situation. If you have a family on your health plan, the insurance alone can eat most of the rate differential.

When W2 Actually Wins

W2 makes more sense when the rate gap is less than 15%, you have dependents on your health plan, you value the simplicity of not managing a business, you're early in your career and building stability, or you're in a high-tax state where business deductions matter less.

When 1099 Clearly Wins

1099 pulls ahead when the rate gap is 20% or more, you're set up as an S-Corp, you have significant deductible business expenses (housing, travel, vehicle), you're disciplined about saving for taxes and retirement, or you value schedule flexibility over stability.

The Bottom Line

Don't compare gross rates — compare take-home after taxes, benefits, and expenses. A $175/hr W2 job with full benefits can beat a $200/hr 1099 gig if you're paying for your own family health plan and haven't set up an S-Corp.

The CRNAs who come out ahead on 1099 are the ones who treat it like running a business: proper entity structure, quarterly tax payments, dedicated business accounts, and a CPA who understands healthcare professionals.