W2 or 1099?

[ides]

A practice dh is looking to take a job with is giving us the choice of being either a 1099 or W2 employee. Most of the docs there are 1099 since they were all private practice docs who then formed a group. I know if you are a w2 employee your taxes are taken out of each paycheck and you pay less payroll tax (employer pays half) than a 1099. However, are there any other benefits? Dh will be paid (after the first year) collections minus overhead and dr expenses (malpractice insurance, health insurance, etc.)? Can we deduct more expenses from our year end taxes if we are 1099 (like travel expenses to far out clinic -70miles each way, etc.)? I know you can put up to $49k a year for retirement in a SEPIra is that a lot more than a traditional IRA? I don't think the practice offers a 401k or other retirement benefits. Trying to pick the right option, any further insight from those who have BTDT would be greatly appreciated.

[spotty_dog]

I'd talk to a tax accountant if you really want to hash it out for your personal situation. But yes if you're covered by an employer 401(k) then your max contribution is $17000 I think. If you're not on a 401(k), your max contribution seems to be $5000 in a traditional IRA? But if you're self-employed you can contribute $49000 to a self-employed plan (we have a Keogh solo 401(k)). The "employer's half" of self-employment payroll tax is also deductible. Depending on your tax bracket these can be massive benefits...or not so much. We also deduct a good number of business expenses. Travel is only deductible if it occurs from one workplace to another, FYI. But professional licensing and memberships and equipment are deductible.

(IANA accountant or lawyer!)

[GrayMatterWife]

Talk to an accountant.

I'm sure what the MDs there are doing is good for them, given their particular circumstances, but don't take any "advice" from them. Most doctors are money-stupid and law-ignorant, even if their advice is well-intentioned. Get your own advice from someone who is qualified and represents you.

[ides]

The travel to the far out clinic would be once a week 70 miles each way from the main clinic.

I'm thinking just from the amount we could put away for retirement being 1099 would be a majior tax advantage. We couldn't put the total away initally but eventually we possibly could.

Hoe does one go about finding a good tax accountant to get advice from? Are inital consults expensive? We will likely need one for next tax season. Would asking these kind of questions be a good way to 'vet' an accountant?

[spotty_dog]

Yeah, so that's almost $80 per trip (55.5 cents per mile in 2012) that comes out of your taxable income. Now, I think docs can incorporate while still being paid on w-2? And thus could still file Schedule C (profit/loss from business) and put those expenses down as a loss? But if you are paid on 1099, you don't have to incorporate to be a sole proprietor for tax purposes. But there might be legal liability reasons to incorporate...

It's very complicated. We don't actually have an accountant, exactly, so I don't think I can offer much advice on that front. One guy's website I was recently on quoted that business returns "start at $1000" and that if he's doing your business return, straightforward ones "start at $500". I think we were expecting a few hundred bucks for a quick consult with a local guy (but the consult turned out to be so quick that the CPA never billed us).