CRNAs and 1099 medical professionals
Tax planning for CRNAs and 1099 medical professionals
Independent and locum CRNAs earn high incomes with no withholding, often across several states, and usually decide on an S corporation before anyone has run the numbers. We plan the year around how you actually work.
We work remotely with CRNAs in every state, and with other clinicians paid on a 1099: locum physicians and anesthesiologists, nurse practitioners, physician assistants and travel clinicians with contract income. Every return is prepared or reviewed by an Enrolled Agent, enrolled to practice before the IRS.
Who this is for
- CRNAs working as independent contractors, through a locum agency or in their own group
- CRNAs with a W-2 hospital job who also pick up 1099 shifts
- Clinicians taking assignments in more than one state in the same year
- Anyone weighing, or already running, an S corporation for their clinical income
What we handle
- Entity choice. Sole proprietor, LLC or S corporation, decided on your projected income, your state and the cost of running payroll, with the reasonable salary documented.
- Quarterly estimates. Each payment calculated from this year’s contracts, not copied from last year’s return.
- Multi-state assignments. Nonresident returns where you worked, credits on your resident return, and estimates that follow you between states.
- Retirement plans. Solo 401(k), SEP IRA or a cash balance plan, sized to your income and coordinated with any W-2 plan you already have.
- Deductions and records. Licenses, recertification, continuing education, malpractice coverage, travel to temporary assignments and health insurance, with the records that support them.
- Coordinated returns. Your business, your personal return and your spouse’s income planned together, including any rentals or investments.
Where 1099 CRNAs most often overpay
- An S corporation set up on a rule of thumb. Because a CRNA’s reasonable salary is high, the payroll tax saved is often smaller than expected, and in some years it does not cover the extra cost.
- No retirement plan for the 1099 income. A solo 401(k) or cash balance plan is often the largest deduction available, and some plans have to exist before the year ends.
- Estimates set from last year. A new contract or a second agency changes the year quickly; underpaying brings a penalty, and overpaying is a loan to the IRS.
- Travel deductions without a tax home. Travel is deductible only when you travel away from a tax home, which itinerant schedules can lose.
- States missed or doubled. A short assignment can still require a nonresident return, and the credit on your resident return has to be claimed to avoid paying twice.
Common questions
Should a 1099 CRNA form an S corporation?
Sometimes, but not by default. An S corporation saves self-employment tax on the profit you take as distributions above a reasonable salary. A CRNA’s reasonable salary has to reflect what anesthesia services are worth, which is often close to or above the Social Security wage base, so the saving is mostly the Medicare portion of the tax on distributions. That has to outweigh the cost of payroll, a separate business return and any state fees. In some states an S corporation also allows a pass-through entity tax election, which can be worth more than the payroll saving. We run the numbers both ways before recommending it.
What is a reasonable salary for a CRNA in an S corporation?
Roughly what the business would have to pay someone else to do the work you do: market pay for CRNAs with your hours and role, in the places you work. It should be set before the year starts, documented, and revisited each year. A salary set too low is the most common reason S corporations draw IRS attention.
Do I have to file a tax return in every state where I take a locum assignment?
Usually you file a nonresident return in each state with an income tax where you earned income, and a resident return in your home state, which generally gives a credit for tax paid to the others. Some states have filing thresholds that a very short assignment may not reach. We track assignments through the year so your estimates are split correctly.
How much should I set aside for taxes on 1099 income?
There is no single percentage that works, because federal brackets, self-employment tax and your state all change it. We project your year each quarter and calculate each estimated payment. As a floor, paying at least 100% of last year’s total tax through on-time estimates (110% if last year’s adjusted gross income was over $150,000) protects you from the underpayment penalty, even if you owe more when you file.
What retirement plan is best for a 1099 CRNA?
Often a solo 401(k), which lets you contribute as both the employee and the employer. If you also have a W-2 job with a 401(k), the employee deferral limit is shared between the plans, but the employer contribution to your solo 401(k) is separate. High earners can add a cash balance plan for much larger deductible contributions. If you run an S corporation, the employer contribution is based on your W-2 salary, not your total profit, which is one more reason to plan the salary carefully.
Can a CRNA take the qualified business income deduction?
Health care is a specified service business, so the qualified business income deduction phases out as taxable income rises above an annual threshold, and many full-time 1099 CRNAs earn above it. Retirement contributions and other deductions that lower taxable income can sometimes bring part of it back, which is one of the things we look at in planning.
What expenses can a 1099 CRNA deduct?
Ordinary and necessary costs of the work: state RN and APRN licenses, NBCRNA recertification, continuing education and conferences, professional dues, malpractice coverage you pay yourself, required scrubs and equipment, the business share of your phone, and travel to temporary assignments away from your tax home. Health insurance you pay for yourself is usually deductible too. Each one needs a record, which monthly bookkeeping takes care of.
I have a W-2 CRNA job and pick up 1099 shifts. What changes?
Your paycheck withholding does not cover the 1099 income or the self-employment tax on it, so you need estimated payments or higher withholding at your W-2 job. The 1099 work is also its own business: its expenses are deductible against it, and it can support a solo 401(k) of its own.
Become a client
Tell us how you work: W-2, 1099 or both, the states you take assignments in, and whether you already have an entity. We read every inquiry ourselves and reply within two business days to set up a 30-minute intro call.
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This page is general information, not tax advice for your situation. Rules change, and the right answer depends on your numbers; that is what the intro call is for.