Help! CRNAs and 1099s

[DMBUGA34]

We're a small pp group at an undesirable location. Recently, perhaps due to the percentage of locums we had, the state came in to see why we had so many 1099s.

Long story short, since CRNAs require supervision, and we provide them with all the tools they need to do their job, they're not considered "independent contractors" by the state (or the 2 law firms we asked).

We'd lose all our locums if we force them into W2s. Has anyone had to deal with this before? How can we justify a CRNA as 1099?

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[chocomorsel]

Don't supervise them. That's gotta be the right answer. I don't know honestly.

Do you use physician locums or just CRNAs?

 

[DMBUGA34]

Do you use physician locums or just CRNAs?

Just CRNAs

 

[jwk]

Several of the big AMCs are of the same opinion. No 1099s.

 

[IlDestriero]

If they really are locums folks that set their own hours and come and go as they please, just filling the shifts they want, that’s one of the definitions of an independent contractor in my state. That’s very different than trying to 1099 your staff CRNAs. You may be able to appeal their determination, but the details probably vary from state to state.


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Il Destriero

 

[Obnoxious Dad]

You need to hire a tax lawyer who is an expert litigator. Don't make any admissions without the advice of counsel. If you get busted for issuing 1099 forms, instead of W-2s, the IRS will decapitate you.

This area is an amorphous mess. Here is a link to an article from the Oregon Department of Revenue which explains this issue.
http://www.oregon.gov/ODA/shared/Do...ces/20FactorTestforIndependentContractors.pdf
Good Luck

 

[aneftp]

Agree consult an attorney.

IRS has strict rules for what definition of 1099 is. It’s on their website

Independent Contractor Self Employed or Employee | Internal Revenue Service

We all know 90-95% of anesthesia practices who pay their “contractors” 1099 are illegal. It’s no secret. Unless they are doing their own billing. Once u get audited. It’s gonna to get nasty

1. Did Crna’s get to choose their own schedule or did u dictate their hours?

2. Did Crna get to choose whatever time they go get vacation? Or are they restricted to 4-7 weeks “paid time off”

3. Are crna paid a set 1099 monthly or bi weekly income? Or are they paid by the day?

What is the Crna contract. If your contract is saying u pay them $160-200k 1099 for 46 weeks work/40 hour weeks....u screwed. That by definition is NOT A 1099. That constitutes an employee and u would owe self employment taxes.

Reason is 1099.....feds know people who are 1099 write off so many things. They aren’t paying the full taxes on the first 128k.

More likely they are paying taxes on first 40-50k due to tax write offs

 

[CommonMan]

We're a small pp group at an undesirable location. Recently, perhaps due to the percentage of locums we had, the state came in to see why we had so many 1099s.

Long story short, since CRNAs require supervision, and we provide them with all the tools they need to do their job, they're not considered "independent contractors" by the state (or the 2 law firms we asked).

We'd lose all our locums if we force them into W2s. Has anyone had to deal with this before? How can we justify a CRNA as 1099?

You are fighting a losing battle. You need a CPA and listen to their advice. No options here.

 

[DMBUGA34]

Our staff CRNAs are W2, only our locums are 1099.

Problem is, we're at an undesirable locations, and the locums seem to only want 1099. W/out them, we'd have trouble staffing the OR

 

[urge]

Our staff CRNAs are W2, only our locums are 1099.

Problem is, we're at an undesirable locations, and the locums seem to only want 1099. W/out them, we'd have trouble staffing the OR

Have you considered making the job more desirable for W2s?

 

[DMBUGA34]

Have you considered making the job more desirable for W2s?

Definitely. They do very, very well. But when their partner can't find a job . . . or they have kids and family's too far away . . . or they can't find a partner . . . etc...

 

[aneftp]

Have you considered making the job more desirable for W2s?

We all know the math.

Many Crna’s who do 1099 work have usually have spouses with w2 jobs and good health benefits already. So 1099 is the way to go since they don’t need health benefits.

So a 200k 1099 Job is actually more desirable than even a 220k w2 Job.

So a group would have to pay the equivalent of 250k w2 to a crna.

Yes i know that sounds strange. That a 200k 1099 Job is “worth more” than a 200k w2 Job That group would have to pay the equivalent of 250k w2 to make it worth while.

But most crna I know who make 1099 income pay literally max 20k in total taxes as independent contractor on 200k 1099 income. They pay themselves a 40k “RN salary”. Sometimes even less with all their write offs. So combined with a spouse with good health benefits. There is no real incentive for crna to take a w2 job unless the practice is willing to throw 30k Plus into their retirement account PLUS THE 200k w2 income. which makes employing w2 crna co prohibitive

Thus paying 1099 is so much easier for groups

1. The group saves money by not paying employee side of payroll taxes

2. The 1099 income is preferred by crna due to tax write offs.

 

[DMBUGA34]

But most crna I know who make 1099 income pay literally max 20k in total taxes as independent contractor on 200k 1099 income. They pay themselves a 40k “RN salary”. Sometimes even less with all their write offs. So combined with a spouse with good health benefits. There is no real incentive for crna to take a w2 job unless the practice is willing to throw 30k Plus into their retirement account PLUS THE 200k w2 income. which makes employing w2 crna co prohibitive

Thus paying 1099 is so much easier for groups

1. The group saves money by not paying employee side of payroll taxes

2. The 1099 income is preferred by crna due to tax write offs.

This! Heck, right now, we don't even care about the extra payroll taxes. The hospital is supportive. It's the fact that they just won't come at all unless it's 1099. If we suddenly switch our current 1099s to W2s, they'll just leave.

 

[DeadSpace]

My God their pay is high! With all those tax benefits and the high pay, they are definitely bringing home a net income greater than a decent number of physicians. Even with their new doctorate, their loans are still less than ours. Anybody know a hot CRNA single and ready to mingle? 1099 or W2, I don't care.

 

[Psai]

This! Heck, right now, we don't even care about the extra payroll taxes. The hospital is supportive. It's the fact that they just won't come at all unless it's 1099. If we suddenly switch our current 1099s to W2s, they'll just leave.

At 200k? Jesus christ these people are needy

 

[BLADEMDA]

We all know the math.

Many Crna’s who do 1099 work have usually have spouses with w2 jobs and good health benefits already. So 1099 is the way to go since they don’t need health benefits.

So a 200k 1099 Job is actually more desirable than even a 220k w2 Job.

So a group would have to pay the equivalent of 250k w2 to a crna.

Yes i know that sounds strange. That a 200k 1099 Job is “worth more” than a 200k w2 Job That group would have to pay the equivalent of 250k w2 to make it worth while.

But most crna I know who make 1099 income pay literally max 20k in total taxes as independent contractor on 200k 1099 income. They pay themselves a 40k “RN salary”. Sometimes even less with all their write offs. So combined with a spouse with good health benefits. There is no real incentive for crna to take a w2 job unless the practice is willing to throw 30k Plus into their retirement account PLUS THE 200k w2 income. which makes employing w2 crna co prohibitive

Thus paying 1099 is so much easier for groups

1. The group saves money by not paying employee side of payroll taxes

2. The 1099 income is preferred by crna due to tax write offs.

All true. I would guess that a $200k 1099 CRNA would demand at least $230k W-2 salary to compensate for the taxes.

Crnas routinely pay themselves low "RN" type wages as a 1099 and then bonus themselves dividends K-1 quarterly. In addition, they write everything off possible and fund a 401k plan.

 

[jwk]

All true. I would guess that a $200k 1099 CRNA would demand at least $230k W-2 salary to compensate for the taxes.

Crnas routinely pay themselves low "RN" type wages as a 1099 and then bonus themselves dividends K-1 quarterly. In addition, they write everything off possible and fund a 401k plan.

But let's be honest and note that physicians (and CAA's) do the same thing.

I worked a 1099 gig up until three years ago when an AMC took over that group and refused to do any 1099s. I was getting $90/hr as 1099. They offered $94/hr as W-2. It would have cost me a lot more money, and I wasn't even being fancy with taxes.

 

[dannyboy1]

At 200k? Jesus christ these people are needy

What’s wrong with maximizing their income? They don’t owe the group anything. That’s not needy, that is the opposite