CRNA's and 1099 status

jwk · Aug 6, 2004

I keep seeing some of the higher paying CRNA positions as 1099 status. I am aware of what 1099 status is - you pay your own taxes and do not have any benefits. Is there anyone here that is on 1099 status that could explain the advantages (if any) that a 1099 position might have as apposed to being an employee? Do you end up paying LESS in taxes on 1099 status than you would as an employee? Thanks in advance.

I get some of my income as a contractor on a 1099. The advantages from a tax standpoint are numerous. For me specifically, here's the deal:

As an employee, I can only deduct non-reimbursed employment expenses that are over and above 2% of my adjusted gross income. So, if I make $100,000 a year, I can only deduct the amount over $2000.

By having self-employment income from a different employer, in addition to my salaried income, I am able to fully deduct my licensure fees, certification fees and costs, pager, cellphone, some auto expenses, and the biggie, my CME costs. The CME one is huge. I can deduct my all airfare, hotel, meeting registration, and a portion of my meal expenses.

I can even deduct more than what I made as a contractor. If I made $5,000 as a contractor last year, but can legitimately show $7,000 in expenses, I show a $2,000 loss on Schedule C, which comes right off your AGI.

You do have to pay self employment tax, in my case only the Medicare portion (2.9% of your net profit) since I max out on Social Security with my employer. But then you get half of that amount credited back in further on down the 1040 form.

I'll leave it to the full-time self-employed folks to explain their side, since I'm sure there are other significant advantages.

zentuit · Aug 6, 2004

I'll leave it to the full-time self-employed folks to explain their side, since I'm sure there are other significant advantages.

First, I am not a tax accountant, you should consult a tax accountant.

With that said, JWK hit alot of them, there are others to owning a business.

- you can put up to 30K per year in a Keogh retirement plan, and that amount comes off pre-tax income;

- if you have an office in the home, and it's your only office, a portion of your house expenses are deductible;

- want those season tickets? portion deductible;

- giving money to your university's scholarship fund? deductible;

- got teenaged kids? hire them to do business related jobs.. oh and stop paying them allowances (after tax), they're working now :chuckle;

- do you pay life insurance and your spouse/kids are the beneficiary(ies)? yep, deductible;

there are alot of perks to owning your own business. Just get a good (great if you can find one) tax accountant/preparer. My sister is our tax preparer (and prepares almost all my family's taxes - including the various business entities), she continually amazes me, and browbeats me for not saving all receipts - "everything has the potential to be deductible".

Tom

Businessman · Aug 12, 2004

First, I am not a tax accountant, you should consult a tax accountant.
With that said, JWK hit alot of them, there are others to owning a business.
- you can put up to 30K per year in a Keogh retirement plan, and that amount comes off pre-tax income;
- if you have an office in the home, and it's your only office, a portion of your house expenses are deductible;
- want those season tickets? portion deductible;
- giving money to your university's scholarship fund? deductible;
- got teenaged kids? hire them to do business related jobs.. oh and stop paying them allowances (after tax), they're working now :chuckle;
- do you pay life insurance and your spouse/kids are the beneficiary(ies)? yep, deductible;
there are alot of perks to owning your own business. Just get a good (great if you can find one) tax accountant/preparer. My sister is our tax preparer (and prepares almost all my family's taxes - including the various business entities), she continually amazes me, and browbeats me for not saving all receipts - "everything has the potential to be deductible".
Tom

Tom,

Could you ask your sister to give us a rule of thumb, when is it worth working full time on 1099 vs. salaried?

Something along the lines: $120,000 in salary is the same as $150,000 as a contractor. Or even a percentage would work: you have to make 20% more as contractor to make it worth paying the extra employment taxes.

Thanks