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Stephen G.
Stephen G., Sr Financial Expert
Category: Finance
Satisfied Customers: 4015
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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Difference between filing as Home Nursing Business (Schedule

Resolved Question:

Difference between filing as Home Nursing Business (Schedule C) & Medical Expense (Schedule A)..

If I obtain an EIN to hire nurses to care for my spouse what type of write-offs can I use to offset some of the income created through insurance medical expenses overpayments?

EIN obtained as other - Medical Employer : Excess medical expenses file on line 21 (other income)

List of items I currently write off as a business, which are allowable as 'Ordinary & Necessary if there is no business:

100% Payroll Processing Fees
Accountants expenses & Software (taxes & recordkeeping)
Advertising (newspaper ads for nurses wanted)
Home Office depreciation 4.17%
Home Office deductions: 4.17% Entire Home Utilities, Maintenance & Repairs, etc.
% of Home Owners Insurance (part of home office deduction)
100% Home Office Supplies & Equipment (paper, ink cart., large & small envelopes, computer (misc.), Printer, Monitor, etc..
Printing of nurses notes yearly
Bank fees & Checks
Postage (send invoices & nursing notes weekly to ins CO)
4.17% Home Owners Asso Dues
Employee Holiday Gifts
Cell Phone (nursing 100%)
Vehicle Mileage (mailing weekly invoices at P.O.)

Please reply,
Submitted: 9 months ago.
Category: Finance
Expert:  Stephen G. replied 9 months ago.

Stephen G. :

Hello, my name isXXXXX & I'll be helping you today. My goal is to give you a complete & accurate answer that you can understand.

Stephen G. :

As far as the home office is concerned, I would question whether or not that is necessary given the level of activity you are engaged in no matter how you chose to file.

Stephen G. :

Any direct expense you incur, postage, supplies, etc. would be deductible.

Stephen G. :

The point being is that it doesn't matter where you deduct the expense, if it is a valid expense that is ordinary & necessary, it is deductible either way.

Stephen G. :

The disclosures that you are required to make on your tax return are actually more detailed on the Schedule C, than on Schedule A.

Stephen G. :

As I said previously, based upon what you have been doing to date, I think you should just continue to file on a Schedule C and not worry about it. If anything, due to the self-employment tax, you'll be paying more in taxes than

Stephen G. :

you would if you reported the activity on Schedule A.

Stephen G. :

Generally, the IRS doesn't get too concerned if you pay too much tax;

Customer:

Lets stick with filing Schedule A in this question just so I know the law.......... 1) So if I deemed deductions valid on Schedule C, they would be valid on Schedule A? ------ 2) (Do you want me to resend question, list became unformated?)

Stephen G. :

Are you still there?

Stephen G. :

Yes, that's what I've said.

Customer:

I thought you would say "Home Depreciation" would not be deductable -

Stephen G. :

Obviously, what you or I or the IRS considers "ordinary & necessary" may differ. That is a subjective standard that requires judgment based upon experience, etc.

Customer:

OK

Stephen G. :

If you are deducting a home office, depreciation is part of that.

Stephen G. :

I can't imagine that your home office expense amounts to a lot of money anyway.

Customer:

With a percentage of entire home utilities, repair, maintenance it was over $3,000. last year -- my home depreciation is only $121.00 p-er year

Stephen G. :

one minute please

Customer:

Take your time - I'm the slow typer

Stephen G. :

Those costs are normally allocated on a square foot basis; ie. the same as the home office percentage.

Stephen G. :

I would suppose you have another dynamic ie. whatever is necessary to take care of your wife also.

Customer:

Yes, everything is calculated on a 10x10 area of my home = 4.17%

Stephen G. :

Is the nursing care on a 24 hour basis?

Customer:

They are here 24 hours at times only, usually 8 hours every day

Stephen G. :

Oh OK.

Customer:

When I go away, they are here 24 hours

Stephen G. :

I guess my question would be is an office necessary and is it used exclusively for your wife's medical care administration?

Stephen G. :

Since you use a payroll service, how much else is required?

Customer:

I have more paperwork and do more on my pc for the nurses than anything else, e.g.: scheduling, checking notes, creating invoices, etc

Stephen G. :

OK, I think you understand what I'm driving at here.

Customer:


Here is kind of a twist if I decide to obtain an EIN for a medical provider, and not a sole proprietor. I'm trying to do this before year end so I can close the Husband/Wife General partnership in 2013.

The invoices I send to the insurance company take 4-6 weeks for me to get paid. If I obtain an EIN as a service provider I will have excess debits for nursing expenses and not enough insurance credits at year end because payments from invoices won't get paid until we are into 2014. So Schedule 'A' medical will be much higher than past years. My itemized deductions are almost never higher than the standard deduction in the past.

Is the increase on Schedule 'A' and/or the change from H/W general partnership to Medical Service provider a good reason to trigger an audit? I realize you would not know for sure, I'm just looking for your opinion. It's not going to change my final decision!

Customer:

Just the first year 2013

Stephen G. :

First of all, nobody knows for sure what triggers the various levels of IRS scrutiny of tax returns. If you are able to use itemized deductions verses the standard deduction primarily because of an increase in medical expenses, I doubt that would trigger anything; as far as the second part of your question, I really have no idea how closely they follow that type of data from year to year.

Customer:

Stephen, thanks for your help --

Stephen G. :

I will say that based upon what you have been doing, I doubt that filing a Schedule C with the kind of numbers you are using, as long as you aren't reporting a big loss, has a very low chance of being audited.

Stephen G. :

Even though I don't think it is correct (I don't think you are running a business as we've discussed); I don't think you are running any risk of under reporting your income, incurring penalties etc. by doing that.

Customer:

Alright then, and since I can't get liability ins,,, my attorney is drafting a contract for my nurses.. I don't remember if he called it a 'waver' or 'convenent' -> Not to sue..... It's not 100% but it's something..

Stephen G. :

Sounds like this got you thinking about some of these things anyway. As I've said, I don't think taxes are much of a risk for you no matter what you do as far as income tax reporting.

Customer:

Now if the Goverment would reopen I could obtain an EIN....... Thank you for all your help ..

Stephen G. :

Are all your nurses citizens and has the payroll service asked you to complete I-9 forms for your employees?

Customer:

I do the W2 and I-9 on every employee, check to make sure their licenses are kept updated, do background checks and only hire US citizens..

Stephen G. :

Well, you've got that well covered.

Stephen G. :

Thanks for asking for me.

Customer:

Been doing that for 18 years, nurses move around a lot - so there is a lot that come and go..

Stephen G. :

I understand. More reason that you need an office.

Stephen G. :

If you need to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Thanks again for using us for your tax and financial questions. You may get a short survey from the site; if it isn't too much trouble I would appreciate it if you would answer it; the survey results are used to rate our performance;

Customer:

Unless you have more advice, I need to go?

Stephen G. :

Not at this time.

Stephen G., Sr Financial Expert
Category: Finance
Satisfied Customers: 4015
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and other Finance Specialists are ready to help you
Customer: replied 9 months ago.

I gave you a $4 tip to make it an even - $20... It didn't say free on my first page, said $16.00

Expert:  Stephen G. replied 9 months ago.

We don't get involved in the $ aspect of the site. We only get a portion of whatever fees you pay or a minimum (as I understand it) if you are a monthly subscriber.

Thanks for the bonus; any bonus indicates satisfaction with the service a customer receives and is much appreciated.

Thanks again, Steve G.
Stephen G., Sr Financial Expert
Category: Finance
Satisfied Customers: 4015
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and other Finance Specialists are ready to help you

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