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  • W2 and 1099

    I started a new job and am a W2 employee with a guaranteed salary working for a small physician group. This group of doctors is out of network for all insurances.  However, as a new doctor in town I am/will be contracted with all the major PPO insurances in the region to help build up my practice. I was told to essentially use my SSN and be a sole proprietor contracted with these insurance companies. All the payments/income I receive from these insurance companies will go directly to the practice and I will not see any of it as I am on a guaranteed salary that is being paid by my practice.

    I'm not very well-versed in taxes yet, but was wondering how this will impact my taxes in April. If I understand it correctly, in addition to the W2 from my group, I will receive 1099s from the insurance companies. However, since I am not really receiving any of that money from the insurance companies how do I ensure that I am not taxed twice?  Also, will I potentially be put into a higher tax bracket based off the additional 1099 income? Any other problems I might face in this situation? Appreciate your help.

  • #2
    Since you are turning over all income to the practice, you will need to track all 1099's that come in with your personal social security number on them.  You will turn those 1099's over to your accountant to declare that income on schedule C, then you will take a deduction for 100% of that amount on schedule C as money turned over to the practice.  So no double taxation.

    I am curious why your practice doesn't use the practice tax ID for billing purposes.  Then all the 1099's would have the practice tax ID on them and not your personal SS#.  But I am not an accountant.

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    • #3
      Thanks for the response. In terms of why they didn't use the practice ID for billing purposes, I was told by our practice accountant that it would complicate matters since the rest of the practice does not accept insurance. Not sure if that's true or not.

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      • #4




        Thanks for the response. In terms of why they didn’t use the practice ID for billing purposes, I was told by our practice accountant that it would complicate matters since the rest of the practice does not accept insurance. Not sure if that’s true or not.
        Click to expand...


        That makes sense.  Insurance companies track things by tax ID#.  If you are in network and the rest of the docs are not, having a different tax ID for billing purposes sounds reasonable.

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        • #5
          I am wondering if you could get a LLC and bill under the tax id for that instead. Worth asking your practice administrator and accountant, that way, there is less confusion overall.

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          • #6
            I am not a CPA, but I seriously question whether as a W-2 employee of the practice, you are a true sole proprietor if 100% of the payment flows through to the practice.

            I would think that this should more correctly be handled by using the 1099 "nominee" process, to indicate that this payment is really that of the practice. With no Schedule C filed.

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            • #7




              I am not a CPA, but I seriously question whether as a W-2 employee of the practice, you are a true sole proprietor if 100% of the payment flows through to the practice.

              I would think that this should more correctly be handled by using the 1099 “nominee” process, to indicate that this payment is really that of the practice. With no Schedule C filed.
              Click to expand...


              This is correct and a not-too-unusual occurrence for employed physicians. However, we do file a schedule C and nominee the income from the 1099s to the corporation, listing the EIN of the corporation for proper IRS tracking. We don't consider the physician to be a true sole proprietor; this is just for convenience.
              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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