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Twice a month, get clear, smart tips to help you keep more money, build wealth, and make taxes easier for 1099 CRNAs.
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
Hi there, this is Randy Larkin.
Imagine earning CRNA income in Vermont while living in London, with a Pennsylvania S corporation. Who taxes you? London? Pennsylvania? Vermont?
The answer is: you have to look at the map.
Let’s use an example. A 1099 CRNA lived in London because her spouse worked for CNN. And she spent much of her time there, but continued operating her CRNA business in the United States.
Her LLC was formed in Pennsylvania and taxed as an S corporation.
Every few months, she flew from London into Boston, rented a car, drove to Vermont, worked there for a couple of months, and returned to London.
Four different places. Four different questions.
Let’s start with Vermont. Where did she actually perform the anesthesia services? Vermont.
That matters because the state where you physically perform the work may have the right to tax that income. So Vermont gets a seat at her tax table.
The fact that her LLC was formed in Pennsylvania does not change where she actually worked.
Now let’s look at Pennsylvania. Pennsylvania may get a seat at the table too, but for a different reason.
If she remained a Pennsylvania resident for state income-tax purposes, Pennsylvania could potentially tax income she earned while working somewhere else.
But filing in two states does not automatically mean double taxation. Pennsylvania may allow a credit for qualifying taxes paid to Vermont.
One state may care because you live there. Another may care because you worked there.
Those are two different questions.
Now look at the business. Does working in Vermont mean she automatically needs a new Vermont LLC?
Not necessarily.
But the Pennsylvania LLC may need to register in Vermont as a foreign LLC — simply meaning an LLC formed in another state.
That is separate from income tax.
Then there is payroll. Because she operates through an S corporation and receives W-2 wages, working in Vermont may also create Vermont payroll requirements, including withholding and possibly unemployment reporting.
So one new contract can create three issues: income tax, business registration, and payroll.
These are not questions you want to discover the following spring when the tax return is being prepared.
The time to ask is when the work location changes.
Now comes the question that can affect thousands of dollars of deductions.
Can she deduct the flights, rental cars, housing, meals, and other travel costs?
Maybe.
That is where the tax-home question comes in. Living in London does not automatically make the Vermont business travel deductible.
Your residence and your tax home are not always the same thing.
Your tax home is generally connected to your regular or main place of Business.
So we need to look at the pattern. How long was each Vermont assignment expected to last? Was the assignment temporary? Did she keep returning to the same facility? What did the contracts say?
Those facts can affect whether airfare, housing, rental cars, meals, and other travel costs are deductible.
Traveling a long distance does not automatically make the trip deductible.
Now step back and look at the whole map.
London was where she spent substantial time with her spouse.
Pennsylvania was where her company was organized and possibly where she remained a resident.
Vermont was where she actually performed the CRNA services.
Boston was simply where she landed before driving to Vermont. Passing through a state is different from working there.
Four places. Four different questions.
For a 1099 CRNA, your tax situation follows the facts: where you live, where you work, where your company is organized, where payroll should be reported, how long the assignment lasts, and whether the travel is truly temporary.
When your work location changes, your tax map can change with it.
That is the lesson.
Before you accept a new contract, do not look only at the hourly rate.
Look at the map.
Then look at the contract.
Then look at your business and payroll setup.
Because the highest hourly rate does not always give you the best after-tax result.
And if you are thinking, “I would not know which of these questions apply to me,” that is exactly why we created the 1099 CRNA Tax System Review.
It is not designed to turn you into a tax expert.
It is designed to help you recognize when something needs to be checked, when a change in where or how you work could create a new tax issue, and when you should ask questions before that issue shows up on your tax return.
You can download the free 1099 CRNA Tax System Review through the link in the description.
ANNOUNCER OUTRO
Thanks for listening to Money Moves for CRNAs.
New episodes drop twice a month.
See you soon.