1099 in CA

[rightonn_dude]

Hi all -

Newish partner in my lifestyle-esaque group. We, however, are W2. I’m told from are managing accountants we cannot be 1099, which would be a lot more beneficial to us as we pay for a lot of things ourselves i.e. CME, malpractice, health insurance. I’m told that if you work solely at one center then you can’t be 1099 for tax purposes. Is this true? I see jobs all over gaswork and some colleagues have mentioned that they friends in other groups that are one center 1099. I have to admit my tax knowledge is garbage.

Are we able to structure as a K1?

Any help is appreciated

Thanks.

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[deleted162650]

Hi all -

Newish partner in my lifestyle-esaque group. We, however, are W2. I’m told from are managing accountants we cannot be 1099, which would be a lot more beneficial to us as we pay for a lot of things ourselves i.e. CME, malpractice, health insurance. I’m told that if you work solely at one center then you can’t be 1099 for tax purposes. Is this true? I see jobs all over gaswork and some colleagues have mentioned that they friends in other groups that are one center 1099. I have to admit my tax knowledge is garbage.

Are we able to structure as a K1?

Any help is appreciated

Thanks.

You guys just need to meet with a CPA who actually knows their s**t. Almost all of the things that you would deduct as 1099 can be expensed through the practice yielding essentially the same tax advantages. All that while maintaining W-2 status so your personal returns are very simple/clean/much less likely to trigger audits. If you want to PM me your general location I might be able to provide some references for accountants that can help.

 

[nimbus]

You guys just need to meet with a CPA who actually knows their s**t. Almost all of the things that you would deduct as 1099 can be expensed through the practice yielding essentially the same tax advantages. All that while maintaining W-2 status so your personal returns are very simple/clean/much less likely to trigger audits. If you want to PM me your general location I might be able to provide some references for accountants that can help.

The only significant thing we can’t deduct pretax that my 1099 friends can deduct are car leases.

 

[deleted162650]

The only significant thing we can’t deduct pretax that my 1099 friends can deduct are car leases.

You can deduct car leases (or take depreciation on a purchase) as W-2 as well.

 

[nimbus]

You can deduct car leases (or take depreciation on a purchase) as W-2 as well.

Oh maybe that’s just my group rules then.

 

[deleted162650]

Oh maybe that’s just my group rules then.

It does require a little more creativity but there’s a legit/legal way to do it.

 

[IMGASMD]

Here’s a direct copy and paste from a solicitation email that I just got from a national/regional (multi-state) group.

“Business expense reimbursement - up to $10,000 pre-tax”
Our group will let you do it at end of the year, and I am a W2.

As far as how we do the car deduction, it’s trickier, especially if you’re based at one location. Harder to write off commute vs travel. Our rule is when you’re home call and gets call back, then you write off mileage. At that point, do you want to get call back, or do you not? Especially only for 60c, (or whatever it is now) a mile?!

Pay someone who knows what they’re doing the first time will save you much more in the long run.

Edit: I am sure there are more creative ways to write off cars, rental, leases. There were groups touting all got new leases every year or two..... so I am sure it can be done. How kosher it is, maybe up for interpretation.....

 

[cchoukal]

Is it possible the new CA law, AB5, is at the root of the OP's problem?

 

[deleted162650]

As far as how we do the car deduction, it’s trickier, especially if you’re based at one location. Harder to write off commute vs travel. Our rule is when you’re home call and gets call back, then you write off mileage. At that point, do you want to get call back, or do you not? Especially only for 60c, (or whatever it is now) a mile?!

The trick is to ad a clause in your group’s employment contract that mandates that everyone must maintain a hope office for the purposes of scheduling, managing finances, yadda yadda yadda. This does 2 things: 1) allows you to take the home office deduction and also write off any equipment for your home office and 2) allows you to deduct your travel between the home office and the hospital.

 

[Cheddar]

Use EHR from home office and then you are traveling from one business location to the next?


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[OneTyme]

Hi all -

Newish partner in my lifestyle-esaque group. We, however, are W2. I’m told from are managing accountants we cannot be 1099, which would be a lot more beneficial to us as we pay for a lot of things ourselves i.e. CME, malpractice, health insurance. I’m told that if you work solely at one center then you can’t be 1099 for tax purposes. Is this true? I see jobs all over gaswork and some colleagues have mentioned that they friends in other groups that are one center 1099. I have to admit my tax knowledge is garbage.

Are we able to structure as a K1?

Any help is appreciated

Thanks.

I don’t think that’s 100% true.

California passed a law, AB5, that very stringently limits the role of independent contractors in employment models. (The basic premis being that the state doesn’t want business avoiding their obligation to pay employees fair wages and provide them with benefits by labeling them as contractors, even if they are full time employees by other objective standards. IE the AB5’s “ABC Test”.)

There was a big to do about this law and most hospitals started forcing independents groups of physicians to become employees.

Fortunately there has also been a change to the labor code (Labor Code section 2750.3), which losses some restriction on AB5 for some classes of workers (including some types of physicians).

It gets even more convoluted from there including the federal standard “Borello Test” and how that interacts with AB5. And then, there is a way to really get into the weeds with case law like ‘Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex)’... but that’s only interesting to me and like one other person on the internet.

The bottom line here:

Physicians are mostly exempt from the mandatory employment classification laws in CA.

You can structure your group as a K1 and then sub structure your K1 as an individual corporation if you want.

It’s just kind of a pain in the @$$...

 

[martvubo]

Business Mileage Deduction | White Coat Investor

Want to make a profit for driving around town? Look at the business mileage deduction. Perhaps some of those miles can reduce your taxes.

www.whitecoatinvestor.com

Seems like the only thing that got in his way wouldn't apply to this setup:

Since I have a home-based business (this blog), I had a plan to “commute” down the stairs to the home office, then drive “between my businesses” to the hospital and back to my home office, then commute back up the stairs. Unfortunately it turns out you can’t do this. If one of your sites of business is your home office, there is an additional requirement. Both jobs have to be in the same industry, which mine are not.

So probably you can find a way to deduct miles with a home office... unfortunately, I don't think the expenses for the actual office can be deducted

Why I Didn't Take The Home Office Deduction

I didn't take the home office deduction this year. Here's why.

www.whitecoatinvestor.com

See rule 1 in "The Three Rules"-- I think it would be really hard to spin that a home office is the principal place anesthesia services are rendered.

 

[deleted162650]

unfortunately, I don't think the expenses for the actual office can be deducted

Wrong

See rule 1 in "The Three Rules"-- I think it would be really hard to spin that a home office is the principal place anesthesia services are rendered.

This exact issue has actually been ruled on by SCOTUS.

 

[IlDestriero]

Anesthesia services include pre and post operative planning and evaluation, note writing, ordering, CME, MOC, academic pursuits, etc. I’m not so sure it’s not Ok.

 

[nimbus]

Anesthesia services include pre and post operative planning and evaluation, note writing, ordering, CME, MOC, academic pursuits, etc. I’m not so sure it’s not Ok.

I deduct internet and cell service as well as computers, iPad, and phone but no home office.

 

[Mman]

in terms of 1099, the general rule is that if you could be classified as a W2 then you should be classified as a W2. You can't really choose to be a 1099, that has to meet stricter requirements.

As for what you can deduct, ask the accountant. You can deduct anything you want and it's all good until you get audited which is why you need the accountant that will be helping defend your audit to chime in on those things. They hopefully have lots of experience that area.

 

[crafted222]

Physicians are generally exempt from the new AB5.

From the CMA; California’s new contractor law will not directly impact physicians, but will touch other health care professionals

Even from the california society of anesthesiologists; AB 5 Exempts Physicians – but Proceed with Caution

 

[dchz]

I don’t think that’s 100% true.

California passed a law, AB5, that very stringently limits the role of independent contractors in employment models. (The basic premis being that the state doesn’t want business avoiding their obligation to pay employees fair wages and provide them with benefits by labeling them as contractors, even if they are full time employees by other objective standards. IE the AB5’s “ABC Test”.)

There was a big to do about this law and most hospitals started forcing independents groups of physicians to become employees.

Fortunately there has also been a change to the labor code (Labor Code section 2750.3), which losses some restriction on AB5 for some classes of workers (including some types of physicians).

It gets even more convoluted from there including the federal standard “Borello Test” and how that interacts with AB5. And then, there is a way to really get into the weeds with case law like ‘Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903 (Dynamex)’... but that’s only interesting to me and like one other person on the internet.

The bottom line here:

Physicians are mostly exempt from the mandatory employment classification laws in CA.

You can structure your group as a K1 and then sub structure your K1 as an individual corporation if you want.

It’s just kind of a pain in the @$$...

I find this stuff way interesting. Do you have a further breakdown? (not trolling, i seriously find it interesting).

 

[OneTyme]

I find this stuff way interesting. Do you have a further breakdown? (not trolling, i seriously find it interesting).

First of all, you’re totally trolling me

Second of all

Beyond Dynamex - Assembly Bill 5 Codifies, Expands, and Creates Exceptions to the Landmark California Supreme Court Decision | Hopkins & Carley | Silicon Valley Law Firm

In its April 2018 decision in Dynamex Operations West, Inc. v. Superior Court, the California Supreme Court considered the criteria that courts should utilize to distinguish independent contractors from employees under the California Wage Orders,

www.hopkinscarley.com

And the previously quoted article:

AB 5 Exempts Physicians – but Proceed with Caution

Both are great reads.

 

[deleted162650]

 

[OneTyme]

They’re trolling me, right??

 

[gasresident1]

Physicians are mostly exempt from the mandatory employment classification laws in CA.

You can structure your group as a K1 and then sub structure your K1 as an individual corporation if you want.

It’s just kind of a pain in the @$$...

If structured this way, would you be able to max out on the 401k (~59k), contribute to cash balance plan, deduct expenses, and write off short term rentals. You'd essentially be a 1099 at that point, correct?

 

[GassYous]

If structured this way, would you be able to max out on the 401k (~59k), contribute to cash balance plan, deduct expenses, and write off short term rentals. You'd essentially be a 1099 at that point, correct?

Yes to the first three. Don't think you can write off short term rentals unless you can justify as a "business expense"

 

[IMGASMD]

Yes to the first three. Don't think you can write off short term rentals unless you can justify as a "business expense"

There was some crna (I believe) who bought a 100K RV then deducted it….. wrote it off in 5 years? This is what I remember from years ago….. no one has been that Creative or Brave …..

 

[nimbus]

Yes to the first three. Don't think you can write off short term rentals unless you can justify as a "business expense"

We do the first 3 and we are W2.

 

[nimbus]

There was some crna (I believe) who bought a 100K RV then deducted it….. wrote it off in 5 years? This is what I remember from years ago….. no one has been that Creative or Brave …..

Did they stay in it during locums assignments? If so, I can see how it may be a legit writeoff.

We had a scrub tech who left to do travel assignments in his conversion van #vanlife.