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To S-corp or not to S-Corp, another one of those, I'm sorry!

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  • To S-corp or not to S-Corp, another one of those, I'm sorry!

    sorry for another one of these questions.

    My income is strictly 1099. I get paid from my main practice as a independent contractor and then from a few hospitals directly.

    Total income for 2020 was about $650k. (I work my butt off and typically spend at least 2 full weekends a month plus many many weekday nights in the hospital on top of my private practice) Currently filing schedule C and set up as PLLC. About 65k in deductible expenses including health care premiums. I take full 57k in solo 401k and $7100 in HSA. We don't have a cash balance plan or anything else.

    I'm loosing a few hospital contracts so 2021 income will likely go down a bit, say $600k, otherwise similar expenses.

    Would a S-corp make sense since I'm above the AGI for qualifying for the sec199 QBI deduction?

    Any input is much appreciated!

    Thank you!
    Last edited by bankingdom; 12-29-2020, 10:26 AM.

  • #2
    From all the scenarios I've run and a salary in the $200s, I would be surprised if the math didn't work for an S-corporation.

    A big part is where you set the salary and whether your state assesses a tax on S-corporations. You're well above the phaseout for QBI so that won't put things more in favor of Sch C.


    • #3
      Concur withDavidGlennCPA - NOT your CPA, only a stranger on the internet, but this appears pretty obvious that an S-corp would make sense. Since you are not in CA, even more to gain from electing S status. Just be prepared to pay more in administrative costs (payroll, taxes, bookkeeping) than previously and be aware that an S-corp involves more complexity. Good luck!
      Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087