How is 1099 CRNA income taxed?
As self-employment income of a trade or business, with no tax withheld unless backup withholding under Section 3406 applies because the CRNA has not furnished a correct taxpayer identification number to the payer. Payments a certified registered nurse anesthetist receives as an independent contractor, whether from a hospital, a surgery center, an anesthesia group, or a staffing agency, are gross income reported on Schedule C, and the net profit after ordinary and necessary expenses, reduced by the deduction in Section 1402(a)(12) equal to one-half of the combined Social Security and Medicare rates applied to it, is net earnings from self-employment (Section 1402(a)). Self-employment tax is 12.4 percent for Social Security plus 2.9 percent for Medicare (Section 1401(a) and (b)(1)), with an Additional Medicare tax of 0.9 percent on self-employment income above $200,000, or $250,000 on a joint return, or one-half of the joint-return amount for a married CRNA filing a separate return (Section 1401(b)(2)). The Social Security portion applies only up to the contribution and benefit base for the year, and wages already paid count against that base first (Section 1402(b)(1)), so a CRNA whose W-2 wages from a hospital job have already reached the base owes only the Medicare portions on the 1099 income, while the Additional Medicare threshold is reduced by those wages (Section 1401(b)(2)(B)). Three deductions offset part of the income tax, apart from the contribution to the CRNA's own retirement plan (Section 404(a)(8)) and the qualified business income deduction (Section 199A), each of which has its own limits: one-half of the self-employment tax other than the Additional Medicare tax (Section 164(f)); health insurance premiums for the CRNA and family, limited to the earned income of the 1099 activity and unavailable for any month the CRNA is eligible for a subsidized plan of an employer of the CRNA, of the CRNA's spouse, or of a dependent or a child under age 27 (Section 162(l)(2)(A) and (B)); and the ordinary and necessary costs of the work, such as malpractice premiums the CRNA pays, state licenses and certification fees, DEA registration, continuing education, and professional dues (Section 162(a)). Because nothing is otherwise withheld, the tax is paid through estimated payments under Section 6654, due April 15, June 15, September 15, and January 15 of the following year (Section 6654(c)(2)), or by raising withholding on a W-2 job, and the Section 6654 safe harbors set how much must be paid in to avoid the underpayment penalty. Withholding has one advantage an estimated payment does not: unless the taxpayer establishes the dates it was actually withheld, tax withheld from wages is deemed paid in equal parts on each installment due date (Section 6654(g)(1)), so a CRNA who keeps a W-2 job while adding 1099 work and falls behind on the installments can cure the earlier ones by raising withholding on the W-2 pay for the rest of the year, which a late estimated payment cannot do. Whether the payer's label is right is a separate question: the IRS classifies a worker by behavioral control, financial control, and the type of relationship, not by the form the payer chose, and either the CRNA or the payer can ask for a determination on Form SS-8. A CRNA who concludes that the work was employment does not report it on Schedule C or pay self-employment tax on it: the IRS directs that worker to Form 8919, which figures only the employee share of the uncollected Social Security and Medicare tax and requires one of the reason codes in its instructions, such as an SS-8 determination received or an SS-8 filed on or before the date the return is filed; the costs of that work are then unreimbursed employee expenses, which Section 67(h) disallows, and Form 8919 is not used for services actually performed as an independent contractor.
Should a 1099 CRNA form an S corp?
Only when the arithmetic works, and for a CRNA whose income is entirely personal services the arithmetic is narrower than the pitch suggests. An S-corporation election does not change what the CRNA does; it changes how the income is taxed. It moves the income to the corporation only if the corporation is the party the facility or agency contracts with and pays, named on the Form W-9 and the Form 1099, and the corporation has the right to direct the CRNA's work; where the contract runs to the CRNA personally and the corporation receives the pay only because the CRNA directed it there, the Tax Court has taxed the income to the individual who performed the services rather than to the corporation (Johnson v. Commissioner, 78 T.C. 882 (1982)), so a facility or agency that will contract only with the individual settles the question before the arithmetic starts. A sole proprietor pays self-employment tax on net earnings from self-employment (Section 1402); in an S-corporation only the CRNA's wages carry Social Security and Medicare tax, and profit above a reasonable salary passes through on a Schedule K-1 without them. The saving is the employment tax on profit that is not attributable to the CRNA's own services. The IRS's guidance on S-corporation compensation treats gross receipts generated by the shareholder's personal services as pointing toward wages and supports non-wage distributions only to the extent receipts are generated by non-shareholder employees or by capital and equipment, and a solo CRNA has neither. Read literally, that guidance points to wages for all of a solo CRNA's receipts. The position taken in practice, that what is left after a salary matching what a W-2 nurse anesthetist is paid for the same cases, call, and hours is a distribution, rests on the comparable-pay factor in the same guidance and on the regulation's measure of what would ordinarily be paid for like services by like enterprises (Treasury Regulation 1.162-7(b)(3)), not on the source of the receipts; it is the position an examination tests, not a safe harbor the guidance states, and the same guidance states the IRS's authority to reclassify distributions as wages. Above the Social Security contribution and benefit base the saving shrinks to the Medicare portions, and for a CRNA whose W-2 wages from a hospital have already reached the base the election can cost more than self-employment tax would: the corporation owes the employer Social Security tax of 6.2 percent on the wages it pays up to the base (Section 3111(a)), that base is applied separately by each employer (Section 3121(a)(1)), and the special refund in Section 6413(c) returns only the employee share withheld above the base and not the employer share, while under Section 1402(b)(1) the Social Security portion of self-employment tax on the same income would have been zero. Two further costs run against the saving: reasonable compensation the corporation pays the CRNA is not qualified business income (Section 199A(c)(4)(A)), although inside the phase-in range above the Section 199A threshold that salary is also the W-2 wages by which the deduction is measured (Section 199A(b)(2)(B)), and the K-1 profit is not net earnings from self-employment (Section 1402(a)) and so is not earned income for retirement plan purposes (Section 401(c)(2)), so the W-2 salary is the only compensation the CRNA's own plan can count. The health insurance deduction also changes form: premiums the corporation pays or reimburses for a shareholder who owns more than 2 percent of its stock are deductible by the corporation as wages in box 1 of the CRNA's Form W-2, outside the Social Security and Medicare wage boxes when paid under a plan for employees, and the CRNA then takes the self-employed health insurance deduction on the individual return subject to the Section 162(l) requirements; a premium the corporation does not pay or reimburse and include in the CRNA's wages is not deductible under Section 162(l) (Notice 2008-1). Add payroll, a separate Form 1120-S, and higher preparation fees, and the election is worth making when the 1099 profit above a defensible salary, taxed at the employment tax rates it avoids, exceeds those costs, and not before. The election is made on Form 2553, which must generally be filed no more than 2 months and 15 days after the beginning of the tax year it is to take effect (Section 1362(b)), with relief for a late election on a showing of reasonable cause; the corporation's return is then due by the 15th day of the 3rd month after its year end, and a late return carries a penalty computed per shareholder per month (Section 6699). The election is federal; state law generally governs whether a nurse anesthetist may practice through a professional entity and what that entity must be called.
How much should a CRNA pay themselves as an S corp salary?
Enough to be reasonable compensation for the anesthesia services the CRNA actually performs, paid before any non-wage distributions are taken, and paid as wages: run through payroll with income tax and Social Security and Medicare tax withheld and deposited, reported on the corporation's Form 941 and on a Form W-2 to the CRNA. The Form 1120-S instructions treat distributions and other payments to an officer as wages to the extent they are reasonable compensation, so a monthly transfer called salary in the books but never run through payroll is still wages, with the withholding, deposits, and returns owed on it and the penalties for missing them. There is no formula and no percentage in the Internal Revenue Code or the regulations; the regulation asks whether the amount is reasonable and is in fact payment purely for services (Treasury Regulation 1.162-7(a)), and the IRS applies factors drawn from case law, including training and experience, duties and responsibilities, time and effort devoted to the business, what comparable businesses pay for similar services, and what the corporation pays non-owner employees. For a CRNA the comparison is direct: what a hospital or anesthesia group pays a W-2 nurse anesthetist for the same case load, call, and hours, which is the comparable the IRS's factors point to. The IRS's guidance directs the analysis to the source of the corporation's gross receipts, and for a solo CRNA every dollar is generated by the shareholder's own services, which points toward wages; there are no non-shareholder employees or equipment producing receipts to support a distribution. A salary at the W-2 comparable with the balance taken as a distribution therefore rests on the comparable-pay factor rather than on the source of the receipts, and it is a position an examination tests rather than a safe harbor. Two boundaries hold: reasonable compensation must be paid before non-wage distributions, and the IRS's position is that it never exceeds the amount the shareholder actually received from the corporation, directly or indirectly. A written, dated analysis prepared when the salary is set, citing the compensation data relied on, is what supports the figure in an examination, and a salary set well below what the CRNA would earn as an employee for the same work is the position an examination targets.
Can a 1099 CRNA open a solo 401(k), and how much can go in?
Yes, if the CRNA has self-employment income, or wages from a corporation the CRNA owns, and no employees other than a spouse; the plan is a one-participant 401(k). The CRNA contributes in two capacities. As the employee, elective deferrals up to the annual dollar limit in Section 402(g), which is indexed and applies to the individual across every plan the CRNA participates in for the year, so deferrals already made into a hospital employer's 401(k) or 403(b) use up the same limit. Deferrals into a hospital 457(b) plan are outside the definition of elective deferrals, which in Section 402(g)(3) lists 401(k), 403(b) salary-reduction, SARSEP, and SIMPLE deferrals only, and have their own limit under Section 457(b) and (c), so they do not reduce the solo 401(k) deferral. As the employer, a deductible contribution of up to 25 percent of compensation (Section 404(a)(3)), where compensation for a self-employed individual means net earnings from self-employment reduced by the deduction for one-half of self-employment tax and by the contribution itself (Section 401(c)(2) and Section 404(a)(8)), which IRS Publication 560 restates as a limit of 20 percent of net earnings from self-employment figured without deducting the contribution. Both together cannot exceed the annual additions limit of Section 415(c), the lesser of an indexed dollar amount and 100 percent of compensation; that limit applies per employer, and a hospital that employs the CRNA and the CRNA's own business are separate employers unless they are under common control (Section 414(b) and (c)), so where the hospital plan is a 401(k), the employer-side room in the solo plan is not reduced by the hospital plan. A hospital 403(b) is different: Section 415(k)(4) treats a 403(b) annuity contract as a defined contribution plan maintained by every employer the participant controls, control meaning more than 50 percent ownership (Section 415(h)), and Treasury Regulation 1.415(f)-1(f)(2) aggregates the 403(b) with every defined contribution plan of a business the participant controls, using as its example a doctor employed by a nonprofit hospital who also owns a professional corporation. A CRNA who owns the business that sponsors the solo 401(k), whether a sole proprietorship or a corporation, controls it, so everything added to the hospital 403(b) for the year, the CRNA's own deferrals and the hospital's contributions, plus everything added to the solo 401(k) must together fit within one Section 415(c) dollar limit, while each plan also meets the limit on its own against its own compensation (Treasury Regulation 1.415(f)-1(f)(3)). The employer-side room in the solo plan is then what remains of that dollar limit after the 403(b) additions and any deferral made into the solo plan, and an excess is attributed to the 403(b) contract and included in the CRNA's income (Treasury Regulation 1.415(g)-1(b)(3)(iv)(C)); IRS Publication 571 states the same combining rule for a 403(b) participant with more than 50 percent control of a corporation, partnership, or sole proprietorship. A CRNA who operates through an S-corporation contributes on W-2 wages only, because the K-1 profit is not net earnings from self-employment (Section 1402(a)) and so is not earned income (Section 401(c)(2)), which is why a salary set low to save employment tax also caps the plan; for that CRNA the employer contribution is up to 25 percent of the wages the corporation pays (Section 404(a)(3)), and the 20 percent restatement, which exists only because a self-employed contribution reduces its own base, does not apply to wages. The dollar limits are indexed each year and should be confirmed in IRS Publication 560 for the specific year, along with the deadlines for adopting the plan and making each type of contribution. The plan has an annual return of its own: Publication 560 states that a one-participant plan whose total assets exceed $250,000 at the end of the plan year files Form 5500-EZ for that year, and that every one-participant plan files it for the final plan year, the year in which all plan assets are distributed, whatever the balance. Once the business hires an employee other than a spouse who meets the plan's eligibility conditions, the one-participant treatment ends.
Which states tax a 1099 CRNA working in several states, and are travel and housing deductible?
Each state where the work is performed can tax it, and travel is deductible only by a 1099 CRNA who is away from a tax home on a temporary assignment. The deduction belongs to a CRNA paid as an independent contractor: a CRNA the agency or hospital pays as a W-2 employee cannot deduct unreimbursed travel or lodging, because the deduction for unreimbursed employee expenses is a miscellaneous itemized deduction that Section 67(h), which was Section 67(g) until Public Law 119-21 redesignated it for tax years beginning after 2025, disallows for tax years beginning after 2017, an end date the same law removed, so an employee recovers those costs, if at all, through reimbursement from the employer under an accountable plan (Treasury Regulation 1.62-2). An accountable plan can pay only expenses that would be deductible business expenses (Treasury Regulation 1.62-2(d)(1)), so a housing or meal stipend paid to a W-2 travel CRNA stays out of wages only if that CRNA has a tax home to be away from under the test described below; paid to a CRNA with no tax home it is a nonaccountable payment and is wages (Treasury Regulation 1.62-2(c)(5)). The same rule reaches a CRNA who works through an S-corporation and is its employee: the corporation pays or reimburses the travel under an accountable plan and deducts it, and the CRNA does not deduct it personally. For a 1099 CRNA, Section 162(a)(2) allows traveling expenses, including meals and lodging that are not lavish or extravagant, while away from home in the pursuit of a trade or business, and Section 274(n) limits the meal portion to 50 percent. Lodging is deducted at actual cost only; IRS Publication 463 states that there is no standard lodging amount, while the federal standard meal allowance may be used in place of actual meal costs by a self-employed person and remains subject to the 50 percent limit, and no travel deduction is allowed unless the amount, the time and place, and the business purpose are substantiated by adequate records or sufficient corroborating evidence (Section 274(d)). Home for this purpose is the tax home: the CRNA's regular or main place of business, or, when there is none because of the nature of the work, it may be the home where the CRNA regularly lives, judged by whether business is performed in that area, living expenses there are duplicated, and the home has not been abandoned; a CRNA who meets all three has a tax home there, one who meets two may, depending on all the facts, and one who meets only one is an itinerant. An assignment in a single location is generally temporary if it is realistically expected to last, and does last, one year or less; the statute treats no period of employment that exceeds one year as temporary, and an assignment realistically expected to last more than a year is indefinite from the start, whether or not it actually lasts that long, which makes that location the new tax home and ends the deduction there. An assignment that starts as temporary becomes indefinite once changed circumstances make it realistic to expect it to exceed a year, and a series of short assignments to the same location that together cover a long period may be treated as one indefinite assignment. A CRNA who moves from assignment to assignment with no regular place of business and no home that is regularly maintained is an itinerant whose tax home is wherever the work is, and an itinerant cannot deduct travel because there is no home to be away from. Costs the agency pays directly, or reimburses after the CRNA accounts to the agency for them, are not deducted again, and a housing stipend or other allowance the CRNA does not account for to the agency is income whether or not the agency includes it on the Form 1099, with records of the costs kept either way (IRS Publication 463, accounting to a client); once an assignment is indefinite, or the CRNA is an itinerant, amounts the agency pays toward living expenses at the work location are income even when called a travel allowance, and a reimbursement the agency includes in the total on the CRNA's Form 1099 is income in any case, with the qualifying costs deducted against it on Schedule C. State income tax is a separate question that federal law does not answer. A state with an income tax generally taxes a nonresident on compensation for services performed inside it, the state of residence generally taxes all of a resident's income and generally allows a credit for tax paid to another state on the same income, and a state with no personal income tax, such as Florida, adds nothing on the residence side, so a Florida CRNA working assignments in taxing states generally files nonresident returns there with no home-state credit to absorb them. Filing thresholds and nonresident rules vary by state, so each assignment state is checked before the assignment is accepted.
Does a CRNA qualify for the QBI deduction?
Yes at or below the income threshold, partially through the phase-out range, and not at all above it, and only on income from a trade or business rather than wages. Nurse anesthesia is a specified service trade or business (SSTB): the regulations under Section 199A define the field of health to include nurses performing services in that capacity (Treasury Regulation 1.199A-5(b)(2)(ii)). For an SSTB the 20% qualified business income deduction is not restricted by the SSTB rule when taxable income does not exceed the threshold amount, is reduced across a phase-out range above it, and is eliminated once taxable income exceeds the top of that range; Public Law 119-21 removed the deduction's scheduled expiration and, for tax years beginning after December 31, 2025, set that range at $75,000 above the threshold, or $150,000 on a joint return (Section 199A(d)(3)); the threshold amount itself is indexed for inflation and should be confirmed for the specific year against the Form 8995-A instructions. Inside that range a second limit phases in at the same time: the deduction is also capped by reference to the W-2 wages the business pays to employees (Section 199A(b)(2)(B) and (b)(3)(B)); a sole proprietor pays no W-2 wages to the owner, while the salary a CRNA's S-corporation pays the CRNA is W-2 wages of that business (Section 199A(b)(4)), so a Schedule C CRNA in the range is reduced by both rules. Three points decide a CRNA's case. First, W-2 wages are never qualified business income (Section 199A(d)(1)(B)); 1099 income of a trade or business is, but the payer's choice of form does not decide which is which: if the CRNA should properly be classified as an employee, the regulations treat the income as earned as an employee even though the payer issued a Form 1099 (Treasury Regulation 1.199A-5(d)(2)). Second, a CRNA who was treated as an employee by a hospital or group and is then paid as a contractor for substantially the same services to the same payer or a related person is presumed, for three years after the change, to still be performing services as an employee, and can rebut that presumption only by showing under the common-law classification rules that the work is that of an independent contractor (Treasury Regulation 1.199A-5(d)(3)); the same facts decide whether the payer should have issued a Form W-2 in the first place. The presumption applies whether the CRNA bills the hospital directly or through an entity such as an S-corporation, and it is rebutted, on notice from the IRS, with records such as contracts that corroborate non-employee status (Treasury Regulation 1.199A-5(d)(3)(i) and (ii)). Third, the test runs on taxable income from all sources on the return, so a spouse's income on a joint return, retirement plan contributions, and the deduction for one-half of self-employment tax all move it. Those deductions also reduce the qualified business income itself: the deductible half of self-employment tax, the self-employed health insurance deduction, and the deduction for contributions to the CRNA's own retirement plan are treated as attributable to the 1099 business in proportion to its gross income (Treasury Regulation 1.199A-3(b)(1)(vi)), so qualified business income is the Schedule C profit reduced by those amounts, not the profit before them, and reasonable compensation paid by the CRNA's own S-corporation is excluded from qualified business income (Section 199A(c)(4)(A)).
General educational information about United States federal tax rules, current as of the review date above. Tax law changes and every situation turns on its own facts. This is not tax, legal, or financial advice and does not create a client relationship. Inflation-adjusted figures should be confirmed for the year in question before relying on them.
