End-of-Year Tax Tips for 1099 CRNAs: Save More Before the Deadline
As the year comes to a close, it’s the perfect time for 1099 Certified Registered Nurse Anesthetists (CRNAs) to take a closer look at their finances and implement last-minute tax-saving strategies. Unlike W-2 employees, 1099 contractors have more control over how they manage their taxes, which means more opportunities to save—if you plan carefully.
End-of-year tax planning is about more than just filing your taxes correctly. It’s a proactive approach to reducing your taxable income, maximizing deductions, and ensuring you meet IRS requirements to avoid penalties. Here are actionable tax tips for 1099 CRNAs to help you save more before the December 31st deadline.
1. Review Your Income and Expenses
The first step in year-end tax planning is reviewing your income and expenses for the year. As a 1099 contractor, you’re responsible for tracking all payments received and business-related expenses. This review ensures your financial records are accurate and helps you identify areas where you can maximize deductions.
What to Look For:
Total income earned from all clients and facilities.
Documented expenses, including travel, continuing education, licensing fees, supplies, and other work-related costs.
Missing or incomplete receipts that need to be gathered before filing.
If you notice any gaps in your records, now is the time to organize and update them. Tools like QuickBooks or Excel spreadsheets can simplify this process.
2. Maximize Your Business Deductions
1099 CRNAs have access to a wide range of tax deductions that can significantly reduce taxable income. By identifying and claiming all eligible deductions, you can lower the amount you owe to the IRS. Some common deductions for CRNAs include:
Travel Expenses: If you commute between hospitals or travel for work, you can deduct mileage, airfare, lodging, and meals.
Continuing Education: Costs for maintaining your certifications or attending training programs are fully deductible.
Professional Fees: Deduct licensing fees, malpractice insurance, and professional association memberships.
Home Office Deduction: If you use a dedicated space in your home for work-related administrative tasks, you may qualify for this deduction.
Supplies and Equipment: Medical tools, scrubs, and other work-related purchases can be deducted.
To maximize these deductions, make sure you’ve accounted for all work-related expenses from the year and keep detailed records to substantiate your claims.
3. Contribute to Retirement Accounts
One of the best ways to reduce your taxable income is by contributing to a tax-advantaged retirement account. As a 1099 CRNA, you have access to powerful savings tools that not only lower your taxes but also help you build long-term financial security.
Retirement Account Options:
Solo 401(k): Allows for contributions as both an employee and employer. You can contribute up to $22,500 (employee contribution limit for 2023, adjusted annually) plus an additional employer contribution, up to a total of $66,000.
SEP IRA: A simplified option for self-employed individuals, allowing contributions of up to 25% of your net income, up to $66,000.
Traditional IRA: Contributions reduce taxable income, though limits apply based on income level and whether you contribute to other retirement accounts.
Maximizing these contributions before the end of the year can lead to substantial tax savings. Plus, you’re investing in your future financial independence.
4. Consider Accelerating Expenses
Another effective strategy for lowering your taxable income is accelerating expenses before the year ends. This involves paying for upcoming business-related costs now, so you can claim them as deductions on this year’s taxes.
Examples of Accelerated Expenses:
Paying for next year’s licensing fees or malpractice insurance.
Prepaying for professional association memberships or certifications.
Purchasing supplies or equipment you’ll need for work.
By accelerating these expenses, you can reduce your net income for the year, potentially dropping you into a lower tax bracket.
5. Take Advantage of the QBI Deduction
The Qualified Business Income (QBI) deduction allows eligible 1099 contractors to deduct up to 20% of their net business income. For CRNAs, this is one of the most significant tax-saving opportunities.
However, eligibility for the QBI deduction depends on your taxable income. If your income exceeds the threshold ($182,100 for single filers and $364,200 for married filers in 2023), you may lose part or all of the deduction. To ensure you qualify, consider strategies like maximizing deductions or contributing to retirement accounts to lower your taxable income.
6. Don’t Forget About Health Savings Accounts (HSAs)
If you have a high-deductible health insurance plan, contributing to a Health Savings Account (HSA) is a smart way to reduce your taxable income. For 2023, individuals can contribute up to $3,850, while families can contribute up to $7,750. HSA contributions are tax-deductible, and the funds grow tax-free when used for qualifying medical expenses.
7. Plan for Quarterly Taxes
If you haven’t been making estimated tax payments throughout the year, you’ll need to ensure you’re caught up by the January 15th deadline to avoid penalties. Review your total income and deductions to calculate what you owe, and submit your final quarterly payment on time.
To avoid surprises, make it a habit to set aside 25-30% of your income for taxes as you earn it. Working with a tax professional can help ensure your calculations are accurate and you’re staying compliant with IRS requirements.
8. Work with a Tax Professional
End-of-year tax planning can be overwhelming, especially when you’re juggling a busy schedule as a CRNA. A tax professional who specializes in working with 1099 contractors can provide personalized advice, help you maximize deductions, and ensure you’re taking full advantage of available tax-saving strategies.
They can also assist with more complex tax considerations, such as determining whether forming an S-Corporation (S-Corp) might benefit you, handling audit defense, and ensuring compliance with IRS regulations.
Conclusion
For 1099 CRNAs, year-end tax planning is an essential part of managing your finances and keeping more of your income. By reviewing your expenses, maximizing deductions, contributing to retirement accounts, and taking advantage of tax-saving opportunities like the QBI deduction, you can significantly reduce your tax liability before the December 31st deadline.
At Commission Based Financial Consulting (CBFC), we specialize in helping 1099 CRNAs navigate tax planning, save money, and achieve financial peace of mind. On average, our clients save $18,000 in taxes during their first year with us. Ready to make the most of your year-end planning? Contact us today to get started.
