Occupational Therapy Continuing Education

Q: I'm a contract Occupational Therapist working for a partial hospitalization program. I just started at the beinging of February. I was told that you have to file taxes quaterly if you do contract work. I was also told that becoming a corporation would help. I'm very confused about everything. I was going to go talk to an accountant about exactly what all I need to do about filing my taxes for the first quater of this year. But seeing as how I'm just out of school and I've never really had to do this before, does anyone have any advice on what I should ask the accountant....or just any general observations about what works best and what doesn't would be appriciated.

A:It looks like the hospital's program is going to treat you as a self-employed person (contract labor). You'll receive a Form 1099 that reports the amount paid to you. From this amount you can deduct any business related expenses you incur in providing the services of being a therapist. You may have mileage, licensing, continuing education, professional dues & publications, uniforms, etc. You are responsible for paying your own taxes (federal, Social Security, Medicare and your state). This is what they mean by "file taxes quarterly". Quarterly estimates are due in April, June, September and January (your state may have different due dates). The estimated taxes must be sufficient in amount to avoid any penalty for underpayment of taxes. You may be able to cut some of your taxes by incorporating, but there are additional tax filing requirements, and costs associated with doing so. A chat with a local CPA or attorney should be able to supply you with the costs and give you a better understanding of the additional paper work. I would recommend against jumping into incorporating until you are sure you understand the cost/benefits, and you are real sure you're going to be doing this type of work, as an independent contractor, for a number of years. The costs to jump in to incorporating for only a year or two are probably not worth it. Only after an analysis of your income and expenses can that determination be made for sure.

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