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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Tax
Satisfied Customers: 1561
Experience:  22 years of tax preparation experience, including individual, trust, and estate returns.
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My husband is starting a chiropractic office (LLC) and I am

Customer Question

My husband is starting a chiropractic office (LLC) and I am a self-employed licensed counselor. We are considering my counseling in his practice. Would it make better sense for both of us for me to be an employee hired for counseling or for me to be an independent contractor? I'm asking mostly for tax purposes which would be better for us both?
Submitted: 1 year ago.
Category: Tax
Expert:  Arthur Rubin replied 1 year ago.

Thank you for using Just Answer.

I don't think I can answer the question as written, but the general rule is that the difference between an independent contractor and an employee is that the employer has the right to direct the actions of the employee, but can only mandate results from an independent contractor. As he is a chiropractor, and you are a counselor, it would probably be unethical for him to direct your actions.

If you did have a choice, then there isn't much difference in taxes if you file a joint return. If he has other employees, the benefit structure would be simpler if you were an employee, but you (collectively) would have to make sure that you are not treated better than the other employees. Also, as an employee, he (the company) would pay withholding; as an independent contractor, you would have to pay estimated taxes. But he would probably have to pay estimated taxes on the pass-through income from the LLC, if it is an ignored entity or taxed as a partnership. If you were an employee, he could set up a retirement plan; as an independent contractor, your options along those lines are limited, although you could set up a "Solo 401(k)". As an employee, your "relationship" would be subject to state labor laws, and would have to file employment tax forms, in addition to the W-2. As an independent contractor, the only additional filing is the 1099.