As an S Corp and Independent contractor, is it better to have the office I work at reimburse my benefits or have the office include this amount as income paid to the S Corp and then pay/write off benefits on my own?

Can an independent contractor surgeon working at a number of hospitals claim the home office deduction?



Thanks.

Zip Code: 90210

I think you're pretty much always better off to have someone pay your professional expenses for you whenever possible.

In your example, you'll actually end up in the same exact place. Let's say that you earn $100k from an organization, and have $20k in professional expenses that they are willing to pay on your behalf.

If they pay the expenses, you report $100k of income, and have no professional expenses to claim. The other option is for them to pay you $120k, and then you claim the $20k of expenses directly against that income. Either way, you end up being taxed on $100k.

With respect to the home office, if you have a separate part of your home used exclusively for business on a regular bases, you should qualify for this deduction. However, it is actually easier for an unincorporated business to claim the home office deduction.

Zip Code: cpa@mdtaxes.com

Mr. Schwartz,

This was also a concern of mine and I agree with your line of thinking; if you can have someone else pay your expenses then you should.

However,my CPA disagrees with the both of us. He feels that the IRS is holding Independent Contractor arrangements under closer scrutiny. Hence, "grossing more" and paying your own business expenses, according to him, better substantiates one's claim of IC status.

Can you please give me your feelings on this, as I am in the same situation for my moonlighting income, but am not incorporated.

I think that's a valid argument that your CPA made. If you are truly independent, then the organization would not be paying these types expenses on your behalf if you are working as their contractors.

I was looking at it from only a tax perspective. And as I mentioned above, you should end up pretty much in the same place tax-wise whether the organization pays your expenses and then pays you, or pays you first, and you use that money to pay those expenses. That holds true for S-Corps and for sole proprietors.

Zip Code: cpa@mdtaxes.com

RE: Home office deduction

I have read that surgeons are unable to claim the office deduction even if they fulfill the requirements because their income is earned primarily in the hospital/surgery center/etc...

Can you clarify this?

Thank you.

Zip Code: 00000

Back in 1999, the Home Office rules changes, and you no longer need to perform the "income producing activity" within the home office to qualify. If you use a portion of your home exclusively and regularly in connection with your profession, and you perform administrative or managerial functions out of your home office, you should qualify.

I wonder what you read that contradicts my understanding of the home office rules.

Zip Code: cpa@mdtaxes.com

See here :

http://www.taxlogic.com/t6bin/page/+/news/office.html