1099 positions

[Pharmado]

I recently interviewed at a practice that is offering a 1099 position. I won't learn about whether or not I will be offered the position until after their next business meeting, but this is a position that I plan to take if offered. I think that I understand the basic implications (both employer and employee FICA, quarterly tax payments etc). My question for those of you who have had these positions before is this; how did you go about learning what tax breaks you can take and how to take advantage of tax code to minimize your tax burden? I don't want to be completely dependent on an accountant to manage my taxes, especially since my wife and I have always done our taxes ourselves. Any help would be appreciated.

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[deleted162650]

I recently interviewed at a practice that is offering a 1099 position. I won't learn about whether or not I will be offered the position until after their next business meeting, but this is a position that I plan to take if offered. I think that I understand the basic implications (both employer and employee FICA, quarterly tax payments etc). My question for those of you who have had these positions before is this; how did you go about learning what tax breaks you can take and how to take advantage of tax code to minimize your tax burden? I don't want to be completely dependent on an accountant to manage my taxes, especially since my wife and I have always done our taxes ourselves. Any help would be appreciated.

A good accountant will save you orders of magnitude more than they will ever cost you. Do yourself a favor and get a good one. There's too much money at stake as an attending anesthesiologist to trust to Turbotax.

 

[pjl]

Hire a good accountant. They will be able to advise you well. Do watch out for a hefty fee every time you talk to them. Make sure you ask good questions, that email you popped off will cost you ~$100.

Run your own taxes every year for a few years, see what you get, then cheat and look at what they come up with. When you see the difference you will probably stick with one forever, but if the difference is small, do yourself a favor and try a better accountant. If there is no difference then, do your own. You need a few years of an accountant though to make sure you dont mess something up. It is definitely not as simple as getting a W2 was, especially if you mix in a few K1s and other investments/deductions.

I have virtually the same income and setup as one of my trusted partners and friends, with very similar outside investment income and deductions. Or so we thought. When we compared our taxes, we found they were markedly different, and the slightly more I was paying in fees was more than made up for by the more thorough utilization of the tax code. Both are way lower taxes than when I tried to slog through on my own.


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[Wiscoblue]

Yup. Get an accountant. He will save you time and money and you will sleep well.

 

[sevoflurane]

+1 on a good accountant. 1099 is very flexible and useful if setup correctly.

 

[Pharmado]

I appreciate the advice. I figure that I will certainly need to use an accountant, especially in the beginning, but I'm not the type to simply hand things over without a good understanding of what is going on. I've never been the type to read too much on financial topics (it's terribly boring if you have NO money), but that's the direction that I'm headed. I would at least like to have intelligent questions to ask and an understanding of what my accountant is talking about when I go to have my taxes done.

 

[BLADEMDA]

I appreciate the advice. I figure that I will certainly need to use an accountant, especially in the beginning, but I'm not the type to simply hand things over without a good understanding of what is going on. I've never been the type to read too much on financial topics (it's terribly boring if you have NO money), but that's the direction that I'm headed. I would at least like to have intelligent questions to ask and an understanding of what my accountant is talking about when I go to have my taxes done.

Go ahead and buy TaxCut or another software for $20-$30. Do your taxes. Then, go to a good accountant and him/her do your taxes. I bet he/she saves you well in excess of the accounting fees justifying the use of their service. On average, my accountant saves me $800 each year but one year saved me $10K versus using the online tax software (FYI I don't use online but buy the disc as I don't trust the web sites from being hacked).

 

[sevoflurane]

w-2 is much simpler. 1099, you have a lot more to loose (or save).
Other options are also available to you that you may not know about (defined benefit plan, for example)

 

[BLADEMDA]

I appreciate the advice. I figure that I will certainly need to use an accountant, especially in the beginning, but I'm not the type to simply hand things over without a good understanding of what is going on. I've never been the type to read too much on financial topics (it's terribly boring if you have NO money), but that's the direction that I'm headed. I would at least like to have intelligent questions to ask and an understanding of what my accountant is talking about when I go to have my taxes done.

Buy TuboTax or Taxcut and do your own taxes. If you are W-2 look for a CPA in the $300-$500 range to do your taxes. W-2 without a side business or a lot of investments isn't that complicated for a CPA.

If you are 1099 then you must have a CPA- no doubt about it.

Each year I spend one hour with my CPA discussing tax law (not to mention doing my own taxes with TaxCut prior to going to the CPA). If you are 1099 then why not schedule a 2 hour meeting with your CPA after tax season is over?

W-2 is relatively straightforward but a CPA isn't that expensive most of the time. Typically, the fee is $250-$850 for a personal tax return and most years I paid my CPA in the low end of that range. I had a CPA who used to charge $850 but found that with W-2, K-1, investments, etc that cost was high so I switched to a more cost effective CPA. Each time I did my own taxes to verify the numbers and I found the higher priced CPA to be about $200 different than the lower cost CPA in terms of the final tax bill to the IRS.

My friends have told me about some very aggressive CPAs out there for 1099; the difference can be in excess in $10K in term of taxes owed by using one CPA over another.

 

[BLADEMDA]

The average cost of a professional income tax preparer to handle a "typical" 2014 tax return (the one filed by April 15, 2015) was $273 this year. This includes an itemized Form 1040 with Schedule A and a state tax return, according to the National Society of Accountants(NSA). Fees vary by region, as well as by the complexity of the return being filed.

http://www.cpapracticeadvisor.com/n...income-tax-preparation-fees-increased-in-2015

 

[BLADEMDA]

The survey also reported the average fees for preparing additional Internal Revenue Service (IRS) tax forms, including:

• $174 for a Form 1040 Schedule C (business)
  
  
• $634 for a Form 1065 (partnership)
  
  
• $817 for a Form 1120 (corporation)
  
  
• $778 for a Form 1120S (S corporation)
  
  
• $457 for a Form 1041 (fiduciary)
  
  
• $688 for a Form 990 (tax exempt)
  
  
• $68 for a Form 940 (Federal unemployment)
  
  
• $115 for Schedule D (gains and losses)
  
  
• $126 for Schedule E (rental)
  
  
• $158 for Schedule F (farm)
  

 

[pjl]

The survey also reported the average fees for preparing additional Internal Revenue Service (IRS) tax forms, including:

• $174 for a Form 1040 Schedule C (business)
  
  
• $634 for a Form 1065 (partnership)
  
  
• $817 for a Form 1120 (corporation)
  
  
• $778 for a Form 1120S (S corporation)
  
  
• $457 for a Form 1041 (fiduciary)
  
  
• $688 for a Form 990 (tax exempt)
  
  
• $68 for a Form 940 (Federal unemployment)
  
  
• $115 for Schedule D (gains and losses)
  
  
• $126 for Schedule E (rental)
  
  
• $158 for Schedule F (farm)
  

Combine this with the other thread about trump and taxes, imagine how many changes you have to keep up on...