Re: Method of paying your therapists

[Guest guest]

,

We do treat our therapists as household employees. This means we have a federal

employer ID number. We pay social security taxes. We also pay unemployment taxes

to the state. We do not deduct federal or state income tax(this is not

required). We issue our therapists W-2. The only persons we do not do this with

are:

ABA Consultant and Occupational Therapist - she does private consulting for many

families and therefore is not our employee but is running a business.

We did claim all our program expenses as medical expenses for the last two years

and have thus far not been audited. We are meticulous with receipts just in

case.

There are some expenses that can be deducted which surprised me: respite, books

about Autism, ABA,etc, tuition for conferences, travel for conferences(not meals

or lodging). The IRS publishes an entire booklet on what qualifies as medical

expenses. It is publication 502 and can be downloaded from the IRS:

http://www.irs.gov/formspubs/lists/0,,id=97819,00.html

I am not an accountant. I would take your accountant's advice and also read 502

- our accountant was not aware of the unusual expenses which can be covered for

a child with a developmental disability.

[ ] Method of paying your therapists

Hi everyone,

Hope you all can shed some light on this one. We are in the process

of forming our first therapy team in order to kick off our in-home

ABA/VB program.

I spoke to my accountant today to ensure I do everything

appropriately for tax purposes (for me and for the therapists). Here

is what he told me: he said that the legitimate way to handle this

is to consider myself an employer and the therapists employees. In

other words, I need to pay employer payroll taxes and have W2's

issued at year-end. He indicated that once we show our ABA expenses

as a medical deduction on our taxes, it will most likely result in an

audit of these expenses since they will be so large in comparison to

our income. We could then be penalized for not paying employer taxes.

I don't intend to start a small panic here, but I've never heard any

other parent mention that they are following a process like this to

pay their therapists. I would appreciate any input on this from

those of you who are funding your own ABA program.

Thanks!!

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[Guest guest]

Hi

Wow, thanks for the input. No, I don't pay employer taxes for any of my

therapists. I pay for private ABA, private speech therapy, private occupational

therapy, and private preschool. All are out of pocket expenses that I list as

medical deductions. I've never heard of paying employer taxes and using W-2s.

I'll have to check into this...please let me know if you hear more.

Thanks again,

Lori (in Tennessee)

[Guest guest]

The following is about tax liabilities related to paying persons to be

therapists in your home where the line is fuzzier than an actual

professional degreed person but rather someone you have probably had trained

or trained yourself to perform ABA therapy on your child. I am neither a

tax professional nor an attorney so this is uninformed opinion, not fact.

http://www.irs.gov/pub/irs-pdf/p15a.pdf

http://www.irs.gov/faqs/faq4-3.html

http://www.irs.gov/irs/article/0,,id=111928,00.html#nonfiler

My son Luke has a program, I don't tell my therapists how to implement the

program, that's their line of work. 1099s for the lot of them.

Arnold

[Guest guest]

I am posting my response to since others are interested in this question:

We do treat our therapists as household employees. This means we have a federal

employer ID number. We pay social security taxes. We also pay unemployment taxes

to the state. We do not deduct federal or state income tax(this is not

required). We issue our therapists W-2. The only persons we do not do this with

are:

ABA Consultant and Occupational Therapist - she does private consulting for many

families and therefore is not our employee but is running a consulting business.

We did claim all our program expenses as medical expenses for the last two years

and have thus far not been audited. We are meticulous with receipts just in

case.

There are some expenses that can be deducted which surprised me: respite, books

about Autism, ABA,etc, tuition for conferences, travel for conferences(not meals

or lodging). The IRS publishes an entire booklet on what qualifies as medical

expenses. It is publication 502 and can be downloaded from the IRS:

http://www.irs.gov/formspubs/lists/0,,id=97819,00.html

I am not an accountant. I would take your accountant's advice and also read 502

- our accountant was not aware of the unusual expenses which can be covered for

a child with a developmental disability.

Tips from what we have done:

1)To simplify things I the program has it's own checking account to make things

easier at the end of the year. I pay all our medical expenses out of this except

those that we charge. Next year I think I will write checks to the credit cards

from this account for all medical expenses and this will completely cover it. I

might make other tax deductible contributions from it as well. Every year I get

more ideas!

2)We have elected to pay both parts of the social security(employer and

employee) so we do not take any deductions from the hourly wage. This simplifies

the checks for me. If you plan on taking out taxes and SS I would consider a

payroll service or a business version of quicken.

3)I keep a spreadsheet that has each employees wages by quarter(this is required

for our state unemployment tax) and then when our taxes were done the accountant

paid all the social security at once (actually given our medical expenses we had

a refund and it was deducted from this.

4) The accountant did the W-2s as well as filing these directly with the IRS.

There is small business Turbotax that will do it - I simply decided it was too

time consuming for me to do versus what they charged. I was able to provide the

wages by employee and the quarterly wages by running the spreadsheet. This also

included the SS# and address of each therapist and the W-2s were mailed directly

to them.

5) I keep every last receipt. Even for index cards, whatever! The supplies are

probably the most likely to be disallowed, but, we'll see if we get audited.

A note on the difference in the consultant and the one-on-one therapists. Read

the definition of a " household employee " versus a contract employee on the IRS

site. I think it would be hard to get around the fact they are employees : we

provide training, materials, set standards for work, etc.

Re: [ ] Method of paying your therapists

Hi

Wow, thanks for the input. No, I don't pay employer taxes for any of my

therapists. I pay for private ABA, private speech therapy, private

occupational

therapy, and private preschool. All are out of pocket expenses that I list as

medical deductions. I've never heard of paying employer taxes and using W-2s.

I'll have to check into this...please let me know if you hear more.

Thanks again,

Lori (in Tennessee)