Sounds like she’s a 1099 contractor. That means she needs to understand what that entails, including taxes and managing her work setup. Contractors are considered independent, so she’ll have more responsibilities on her end.
@Flynn
Make sure she understands her responsibilities. For example, does she need her own malpractice insurance? Who handles facility costs? This all needs to be in a contract so there are no surprises.
It’s worth checking if the clinic is misclassifying her as a contractor. If she’s working set hours or has a manager, she might legally qualify as an employee. Some companies do this to save on taxes and benefits.
Cameron said:
@Wren
1099 is pretty standard for therapists, though.
True, but they still need to follow the rules about what makes someone a contractor versus an employee.
She should plan to make estimated tax payments four times a year. Waiting until the end of the year is a bad idea.
The clinic can only do this if she’s genuinely a contractor. Make sure they’re classifying her correctly. Check these IRS and Department of Labor guidelines: Fact Sheet 13: Employment Relationship Under the Fair Labor Standards Act (FLSA) | U.S. Department of Labor and Independent contractor (self-employed) or employee? | Internal Revenue Service.
As a contractor, she’ll also pay both the employer and employee portions of Social Security and Medicare taxes.
Beckett said:
As a contractor, she’ll also pay both the employer and employee portions of Social Security and Medicare taxes.
That’s an additional 15.3% of her income on top of federal and state taxes.
She’ll be treated as self-employed and will need to report her earnings on Schedule C and pay self-employment tax (Social Security and Medicare). She can also deduct expenses like licensing fees, supplies, or insurance to lower her taxable income. Making quarterly payments will help avoid penalties.