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FICA taxability of “royalties”?

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  • Cubicle
    I queried one tax guy who didn’t understand the nuances. But speaking to an accountant is on my list.

    To comment on the concerns of referrals, I honestly hadn’t thought about it as the new guy is seeing my prior patients & new ones who wander in or are referred from unaffiliated doctors (ER, PMD). In terms of ownership, I’d say the practice “owns” the patients, the new guy is just servicing them.

    But to the point about the new guy paying more as he sees more, yeah I could see that as a concern. But my tip of the tongue thinking is I’m not referring patients to him while he pays me later on. I’ll definitely mention that to my lawyer. To me it just looked like “fee for service”. But thank you for mentioning it.

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  • Random1
    You should talk to an accountant about this.

    If he is operating as a separate entity , and paying you "rent" for space and services , he should issue you a 1099 and you report it is as income.

    Renting space based upon volume, may be looked at differently from a medical standpoint with referrals which would be different than tax law.

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  • Cubicle
    started a topic FICA taxability of “royalties”?

    FICA taxability of “royalties”?

    Is income received from another doctor subject to FICA? Schedule C or Schedule E or just other income on a 1040?

    Some presumptions:

    I am an Eyelash Surgeon. I have a practice. Solo Proprietor, Schedule C filer.

    I want to slow down. Another Eyelash Surgeon, different NPI, different Tax ID, works in the practice. He uses my owned medical space, medical equipment, takes over seeing the patients. My staff who I pay schedule patients for him to see, handle billing, phone calls, etc… He is just a doctor seeing patients but he sets his hours & availability & takes off when he wants without approval from me.

    The billing though is done under his Tax ID & goes to his bank accounts. So the insurance 1099s go to him at the end of the year. He pays his own malpractice.

    He does not want to buy or own. He wants to pay 50% of what he receives to me as compensation. There will be no ownership interest or transfer. He is responsible for all day to day operations, sets his own hours, orders supplies but I pay for the supplies, utilities, property taxes, etc...

    He is also a Sole Proprietor & Schedule C filer. He will report payments to me on his Schedule C as a deduction. Where on my taxes do I report the compensation received? Is this income on my Schedule C? Is this royalties for a Schedule E? Or just 1040 income?

    Is he just “renting” my staff & space? Is he my employee? Is he an independent contractor?

    Should I just have him leaves bags on cash under the doormat??? (please please please…)

    Additionally, would the following modifications change the above answer as to how I report the income?

    A: If the compensation percent he pays me is less than 50%? More than 50%?

    B: I am still working, reduced hours, but still earning >$100,000 on my own Schedule C? What if I slow down significantly & am only earning ~$30,000 on my Schedule C?

    C: What if I am completely retired? No earnings as an Eyelash Surgeon at all. But I still have the space, equipment, & staff & I pay for it/them all?

    Any help appreciated. Trying to figure out if this would be worth it.