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The IRS defines an independent contractor as “self-employed”. On the flip side, as an employee, the employer has the legal right to control what, when, where and how services are performed, even if the employee is given freedom of action. As you’re aware, most full-time and part-time temporary hygienists are required to follow your office protocols under your supervision as a dentist. Therefore, all hygienists are employees whether full-time, regular employees or temporary.

Here is a scenario for you: You planned a personal trip to Los Angeles, arriving on Friday afternoon and leaving on Sunday afternoon. None Day 1, Friday, is a personal day. : You travel on Friday to meet with the vendor on Saturday and return home on Sunday. If you are planning a trip that will involve both personal and business days and would like one of our Dental CPAs to review your trip days for tax deductibility, chat with us anytime on our home page!

The first question that arises when you convert a personal residence into a rental is how to determine the property’s tax basis for depreciation purposes during the rental period and for gain/loss purposes when you eventually sell. In general, the PAL rules allow you to deduct passive losses only to the extent you have passive income from other sources, such as positive income from other rental properties or gains from selling them. Another good thing is that if your rental property rises to the level of a trade or business, your rental profits avoid getting socked with the 3.8 percent net investment income tax (NIIT). When you sell a rental property that you’ve owned for more than one year, the profit (the difference between the net sales proceeds and the tax basis of the property after subtracting depreciation deductions during the rental period) is generally treated as a long-term capital gain.

If you filed your business income and expenses as a proprietor in 2017 and reported $100,000 or more in gross receipts, your chances of IRS audit were 2.4 percent (2017 returns are still open for audit, so the percentage could increase). If you operate as a corporation, your home-office deduction does not show on either your personal return or your corporate return if you have the corporation reimburse the office as an employee business expense. Your corporation reimburses $1,000 (10 percent times $10,000), so your personal net mortgage interest expense for the year is $9,000 ($10,000 minus $1,000). With proper proof, your corporation gets the tax deduction and you, the employee, get an employee reimbursement that is not taxable income to you.