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Ask Merlo Your Own Question
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I am an FLP (difficulty of care family living provider) since

Customer Question

I am an FLP (difficulty of care family living provider) since 7/09 and am unsure how income taxes work (federal and NM state).
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.
Hello jwhitting,

As a FLP, basically you are working as an independent contractor or self employed person. This means you will be responsible for paying your own federal and state income taxes, as well as SS and Medicare taxes.

At the end of the year you will report all of your income and your related expenses on Schedule C of your personal tax return. Tax is then due on your net earnings after deducting expenses.

Since taxes are not withheld from your checks as is the case with a regular employee job, you should try to estimate what your total tax liability might be at the end of the year, and then make quarterly estimated tax payments to both the IRS and the state of NM. Otherwise, at the end of the year if you owe too much tax then you would also have some penalties and interest to pay for the underpayment of tax during the year.

Estimated tax payments are made to the IRS on Form 1040-ES and to the state of NM on Form PIT-ES.

If this was helpful please press the Accept button.

Thank you jwhitting, and let me know if you have more questions.

Customer: replied 7 years ago.
I was told at hire that I am tax exempt from federal income (due to the difficulty of care status), and cannot contribute to SS nor will I earn SS credit
Expert:  Merlo replied 7 years ago.
Hello again jwhitting,

Can you please tell me who or what agency is paying you to provide these services?

Customer: replied 7 years ago.
I am contracted with Ability First; an agency providing family living provider service to 2DD Waiver clients (NM Dept of Health regulated) in their home in Albuquerque, NM. I live in Belen (about 38 miles south) and commute to the site every Wednesday afternoon and provide care to the clients through Monday morning. I do not get reimbursement for mileage and contribute to the house monthly food budget (1/3).
Expert:  Merlo replied 7 years ago.
Hello again jwhitting,

I am not familiar with this agency and whether or not the services they offer qualify for tax exemption on your income. Let me put your question back on the open board to see if one of the other experts here is more familiar with your particular situation.

Customer: replied 7 years ago.
thank you Merlo...I await a reply