ANNOUNCER INTRO
Welcome to Money Moves for CRNAs—the podcast for 1099 CRNAs who want clarity, confidence, and control over their money. This podcast is for educational purposes only and is not personalized tax or financial advice. Here’s your host, Randy Larkin, with Atlanta Tax Planner.

HOST INTRO
Hi there, this is Randy Larkin. If your S-corp salary came from a percentage, another CRNA, or last year’s number, you may not really have a reasonable-compensation calculation. You may just have a number. That does not automatically mean the number is wrong. But I would want to know how you got it. Because reasonable compensation should not start with a number. It should start with the work you are actually doing. So today, let’s look at what should go into that calculation.

BODY
First, how much are you actually working? How many weeks are you working this year? How many hours? Are you working three days a week? Five? Are you taking eight weeks off? Or hardly any? Those facts matter. Two CRNAs can each make $350,000 and still have very different situations. One may work 48 weeks. The other may work 38 weeks at a much higher hourly rate. Same income. Different work. That is why I would not take business income and simply multiply it by a percentage. Income alone does not tell you what work was performed.

Next, look at what you actually do. The obvious part is your clinical work. But if you own the S corporation, that may not be all of it. You may review contracts. Handle payroll. Work on bookkeeping. Deal with credentialing. Take care of banking, insurance, or other administrative work. That is still work you are performing for the corporation. So I would not just ask: “How many clinical hours did you work?” I would also ask: “What other work did you perform for the business?”

Now look at your location and work setting. Compensation is not identical everywhere. And your situation may change during the year. Maybe you move to another facility. Add another contract. Drop a contract. Start working in another state. None of those things automatically means your salary changes. But they may change the facts behind the salary. And when the facts change, I want to look at the calculation again. Now let’s talk about business income. Suppose your S corporation made $300,000 last year. This year it makes $425,000. Does that mean your salary should automatically go up by the same percentage? No.

The better question is: Why did the income go up? Did you work more hours? More weeks? Did you add another contract? Or did your hourly rate simply increase? Those are different situations. A large change in income may be a reason to review reasonable compensation. But income by itself does not give you the answer. And finally, you should be able to support the number. What were your clinical hours? How many weeks did you work? What other duties did you perform? What location did you use? What changed during the year? You do not want to pick the salary first and explain it later. The goal is not to find the lowest salary you think you can get away with. The goal is to have a salary that is reasonable and supportable based on what you actually did. That is the difference. And that is why reasonable compensation should not simply be set once and forgotten.

Your hours can change. Your duties can change. Your contracts can change. Your income can change. Your salary may stay the same. But if it does, I want it to stay the same because the facts still support it. Not simply because it was last year’s number.

HOST OUTRO
So here is the question I would leave you with. If somebody asked you today how you came up with your S-corp salary, could you explain the calculation? Or could you only tell them where you got the number? If you are not sure about that, that is one of the reasons we created the 1099 CRNA Tax Checkup. It walks through the major parts of your tax system, including payroll, estimated taxes, deductions, travel, multistate issues, retirement planning, and year-end tax projections. It is not designed to turn you into a tax expert. It is designed to help you see what may need attention before it becomes a problem. You can download the free 1099 CRNA Tax Checkup using the link in the description.

ANNOUNCER OUTRO
Thanks for listening to Money Moves for CRNAs. New episodes drop twice a month. See you soon.