|
Health Care Professionals
This information is designed to provide income tax information specifically pertinent to individuals who work in the health care professions.
While in many ways the IRS treats health care professionals just as they treat taxpayers in other fields of employment, there are some special tax treatments and deductions worth discussing.
Income
Most health care professionals fall into two income earning groups. Either they are employees or self-employed. Some individuals actually earn income as both an employee and as a self-employed individual. For more information on whether you are an employee or self employed, please call us.
Employee or Self-employed?
For tax purposes, workers in health care will be treated as employees or self-employed unless they work on a volunteer basis.
As an Employee:
- Your employer will withhold Social Security, Federal and State taxes and any amounts you may have elected for fringe benefits such as health care insurance, life insurance and savings plans.
- Any non-reimbursable expenses related to your work are subject to the 2% of adjusted gross income (AGI) threshold before any deductions are allowed.
Tip: Any excess cost above a reimbursement may be an itemized deduction above the 2% of AGI threshold.
As a self-employed:
- Your 1040 tax return is filed as self-employed (Schedule C).
- You should receive a Form 1099 from each business client or customer who has engaged your service.
- Payments from individuals must be recorded as income.
- Generally no withholdings are taken for Social Security or Federal or State income tax.
- You will be subject to the self-employment tax of 15.3%.
- You will need to file quarterly estimated taxes to pay your federal, state and self-employment tax obligation.
- All business related expenses are directly deductible from your gross income without the 2% threshold.
Excludable income to employees
- Reimbursements to employees for purchase of required uniforms and other required personal equipment used solely for their work can be excluded from income.
Excludable Research Income
Income received for research may be exempt from income tax by health care facilities in several ways:
- Income of non-profit hospitals and medical research facilities for research conducted for any person or the U.S. Government and it’s agencies or State governments
- Income of any primarily research-oriented organization the results of which are made freely available to the public
- Income of labor unions or agricultural or horticultural organizations that is used to establish a hospital, retirement home or similar facility specifically for the aged and infirmed
|
