Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

I live with a man, who has MS..I've quit my career, and now

Customer Question
Good day ..i live with...
Good day ..i live with a man , who has MS..I've quit my career , and now take care of him...he has a trust fund ..they are willing to pay me for his home health care ..28,800 a yr ..for round the clock care ..so if I file a 1099 independent contractor .it has me paying apx 8,000 in taxes ..is there a better filing status for what I do maybe domestic services.that will save me on what I pay ...I'm not a proffesional care with my own LLC...I'm just someone , that lives with this disabled man and takes care of him drives, him etc ? .
Submitted: 2 months ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 2 minutes by:
9/12/2017
Tax Professional: Richard, Tax Attorney replied 2 months ago
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55,810
Experience: 29 years of experience as a tax, real estate, and business attorney.
Verified

Hi! My name is Richard & I will be helping you today! It will take me a few minutes to type a response to your question. Thanks for your patience!

Ask Your Own Tax Question
Tax Professional: Richard, Tax Attorney replied 2 months ago

Good evening. I would suggest you form a limited liability entity...an S Corp or an LLC electing to be treated as an S Corp...to save some of the self-employment taxes that make up that $8,000. Both the LLC and the S Corp are limited liability entities meaning your personal assets would not be at risk for the debts and liabilities of your entity. And, both are "flow-through" entities for tax purposes...meaning that the entity does not pay taxes; rather the operations of the entities flow through to your own personal tax return. The LLC is more flexible as it allows for preferential allocations of profits and losses, but if you are a single owner, that probably doesn't make much difference. The LLC also is a bit less cumbersome administratively as your filing requirements. And, unlike an S Corp, the LLC is not required to have formal meetings and keep minutes of those meetings. The biggest issue with the LLC is that as the owner of an LLC, you are considered to be self-employed and must pay the 15.3% self-employment tax contributions towards Medicare and social security. As such, the entire net income of the LLC is subject to this tax. With an S Corp, if you work for the entity, you must pay yourself 'reasonable compensation.' Basically, the shareholder must be paid fair market value, or the IRS might reclassify any additional corporate earnings as 'wages.' Unlike an LLC, where you are subject to employment tax on the entire net income of the business, only the wages of the S-Corp shareholder who is an employee are subject to employment tax. The remaining income is paid to the owner as a 'distribution' which is either taxed at a lower rate or or not at all depending upon the particular facts. BUT, as shareholder, you must receive reasonable compensation. If you get greedy by paying yourself a lower salary with the resulting higher distributions, you risk the reclassifying your distributions as wages. Typically, the best solution is to form an LLC and then elect for it to be treated as an S Corp for tax purposes; this results in the best of both worlds...the flexibility of an LLC and the advantageous self-employment tax treatment of an S Corp. :)

Thank you so much for allowing me to help you with your question. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as Good or Excellent (i.e., 4 or 5 stars)(hopefully Excellent/5 stars!). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

Ask Your Own Tax Question
Tax Professional: Richard, Tax Attorney replied 2 months ago

Hi there. I'm just following up. My screen indicates that you have not reviewed my response. Please let me know if you did not receive it so I can re-send it if necessary.

Also, I have another idea for you that I will be happy to share with you once I know you're still with me. :) Richard

Ask Your Own Tax Question
Ask Richard Your Own Question
Richard
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55,810
55,810 Satisfied Customers
Experience: 29 years of experience as a tax, real estate, and business attorney.

Richard is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

55,810 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,695 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Filed W1040 for self-employment. Should I file amended return for HSH?
I was self-employed last year and I filed a W1040 tax form. Everything went through well. I did it through an H&R computer program. Currently I am in need of financial aid as I am going to college. I … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Can an independent contractor/ 1099 worker's wages be
Can an independent contractor/ 1099 worker's wages be garnished in Texas for federal student loan debt?… read more
abci168
abci168
Principal
27 satisfied customers
2 Member LLC now 1 Member LLC. What forms to file to IRS? I
2 Member LLC now 1 Member LLC. What forms to file to IRS?I have an LLC that was Me and Member B. Member B has now left the LLC and sold his ownership to me for no consideration. I am now the sole owne… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,490 satisfied customers
I had some self employment income where I was paid in
I had some self employment income where I was paid in bitcoin. I also made some bitcoin payments to a couple of businesses for what would be considered commissions. Would I report the income and expen… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
738 satisfied customers
I am working as an independent contractor for a university
I am working as an independent contractor for a university and have an LLC with C taxation election. The University refused to accept the W9 listing the LLC and informed me that I must complete the W9… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Income from the leasing of cars...is it self employment
Income from the leasing of cars...is it self employment income? … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
As an independent contractor (1099) should I form an LLC? Do
As an independent contractor (1099) should I form an LLC? Do I need to? … read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
738 satisfied customers
I am trying to figure out the net income from the following
Hi. I am trying to figure out the net income from the following part-time jobs in MARYLAND and then the total net income. If possible, will you please send me how you arrived at the figures (the calcu… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
If I work as an independent contractor under a foreign LLC
If I work as an independent contractor under a foreign LLC partnership in California, do I need to register as a foreign LLC in CA? The gross income from CA this year would be less than 50K. CA is NOT… read more
taxmanrog
taxmanrog
Master\u0027s Degree
702 satisfied customers
I am finalizing a personal tax return and my client has 8 or
I am finalizing a personal tax return and my client has 8 or 9 K-1 forms from operating companies that he owns. One company that i do not prepare issued a K-1 with a line 1 income of $242,089 and a se… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
738 satisfied customers
Company A transferred assets and liabilities to a newly
Company A transferred assets and liabilities to a newly formed Company B … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am trying to file my 1040 personal taxes. I received
I am trying to file my 1040 personal taxes. I received officer compensation on my c corporation but I do not have payroll to receive a w-2 form. How do I report the compensation on my 1040? … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,230 satisfied customers
If someone who is self -employed makes $100,000 net income
if someone who is self -employed makes $100,000 net income in NYC how much % age approximately goes in taxes ? ( including nys and nyc taxes)… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,230 satisfied customers
I have a personal Tax question. Next month Medicare will be
I have a personal Tax question. Next month Medicare will be my health insurance provider as I turn 65 in September. Am current on my present health care premiums with the exception of August premium. … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Nevada LLC company "A" has Independent Contractor (IC's)
Nevada LLC company "A" has Independent Contractor (IC's) agreements with several IC's, who are all LLC's or Corporations located in various States. The standard IC agreements state that the IC's are r… read more
Chad CFP ®
Chad CFP ®
Certified Financial Planner(R), Pro
Master\u0027s Degree
738 satisfied customers
I am preparing the personal tax return for my employers, and
I am preparing the personal tax return for my employers, and I just found out they operate an LLC. What is the rule of thumb for determining whether to elect to be taxed as partnership or corporation.… read more
Matthew Breecher
Matthew Breecher
President
MBA (Graduate Legal Studies)
285 satisfied customers
A PERSON HAS A NET INCOME FROM SELF EMPLOYMENT OF $16,000
A PERSON HAS A NET INCOME FROM SELF EMPLOYMENT OF $16,000 BUT TAXABLE INCOME OF $0, CAN HE STILL CLAIM EIC HE IS MARRIED AND HAS AN 8 YEAR OLD DEPENDENT.… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
There is no credit on Illinois personal tax return for
There is no credit on Illinois personal tax return for property tax paid for vehicle, correct? Thanks,… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
13,695 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x