Contract physical therapy: is it a W-2 contract or 1099 work?

Contract physical therapy covers two different arrangements: a fixed-length contract as the W-2 employee of an agency, which is how a travel contract works, or 1099 work as an independent contractor billing for your own services. The IRS decides which one you are by the facts of control, not by the word contract, and the answer decides who pays your Social Security and Medicare taxes and where your health coverage comes from.

By ProTherapy Staffing, published November 11, 2026.

What does contract physical therapy mean?

A job with an end date. On a travel contract you work a set number of weeks at one facility, and the agency that placed you is your employer: it runs payroll, withholds taxes and issues your W-2, which is why the pay package splits into a taxable wage and stipends. Travel therapy contracts covers the terms themselves.

The same words are also used for 1099 work, where a clinic or a home health company pays you as an outside business for visits or hours. Nothing in the job title tells you which one you are being offered, so ask, in writing, whether the role pays on a W-2 or a 1099.

How does the IRS decide employee or contractor?

By the whole relationship. The IRS page Independent contractor (self-employed) or employee? says: “In determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.”

It sorts those facts into three groups. “Behavioral : Does the company control or have the right to control what the worker does and how the worker does his or her job?” “Financial : Are the business aspects of the worker’s job controlled by the payer?” And the type of relationship: “Are there written contracts or employee type benefits (that is, pension plan, insurance, vacation pay, etc.)?” A facility that sets your schedule, your caseload and your documentation looks like control.

What if you are not sure which one you are?

You can ask the IRS to decide. Its Topic 762 says: “If you want the IRS to determine if a specific individual is an independent contractor or an employee, file Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding”.

Before that, read the offer. A contract that names the agency as employer, promises a W-2 and lists benefits answers the question on its face; one that calls you a vendor, asks for an invoice and leaves taxes to you is 1099 work, whatever the job post called it.

If you want to see what a W-2 travel contract pays for your discipline and setting, ask a ProTherapy recruiter: Find my next contract.

What does each one mean for your taxes?

On a W-2 the employer withholds and pays its share of Social Security and Medicare. On a 1099 you pay both halves yourself. The IRS page on self-employment tax says it “is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.”

It also gives the rate: “The self-employment tax rate is 15.3%.” That comes on top of income tax, which nobody withholds for you, so 1099 earnings usually mean quarterly estimated payments. A 1099 rate that looks higher than a W-2 offer has to cover that tax and the benefits the employer would otherwise pay.

Where does health coverage come from?

On a W-2 travel contract, usually from the agency’s plan, if you take it; our health insurance guide compares that with other options. On 1099 work you arrange your own. HealthCare.gov’s page for the self-employed says: “You can buy health coverage through the individual Health Insurance Marketplace”.

Price that coverage into any 1099 rate before you compare it with a W-2 package, along with liability insurance, licensing and continuing education, which an agency may otherwise pay for on a contract.

Which questions settle it before you sign?

Ask who issues the tax form at the end of the year, who sets your schedule and caseload, who supplies the documentation system and equipment, and whether there are benefits. Those map straight onto the IRS’s behavioral, financial and relationship questions.

Then ask how stipends are handled. Housing and meal stipends are an employer’s reimbursement arrangement, so on 1099 work there is no agency stipend to receive; your costs become business expenses on your own return. How pay packages work shows what a W-2 contract adds up to, for an even comparison.

Frequently asked questions

Is contract physical therapy the same as travel therapy?

Often, but not always. A travel PT contract is a fixed-length job as the W-2 employee of an agency; contract PT can also mean 1099 work as an independent contractor. Ask which one the offer is.

How does the IRS decide if I am an employee or a contractor?

It weighs all the facts showing the degree of control and independence, in three groups: behavioral control, financial control, and the type of relationship. You can ask the IRS to decide by filing Form SS-8.

Do I pay more tax on a 1099 contract?

You pay both halves of Social Security and Medicare as self-employment tax, at the rate the IRS gives of 15.3%, and no one withholds income tax for you, so you usually make estimated payments.

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