New Dentist has Questions about Insurance Checks and 1099 Reporting

I recently started at a Medicaid office 2 days per week as an independent contractor. I work 2 days at another office as an employee and 1 day at a third office as an independent contractor. (Can you guess what city this is?) I have always done my own taxes with turbo tax (I enjoy it???). At the Medicaid office I will receive the Medicaid check, via my SSN and Medicaid ID number. I then will deposit it, keep my percentage and write a personal check to the office I am working at for their percentage.

I never received an insurance check directly before so what happens at the end of the year? Does Medicaid issue a 1099 to me?

Sounds like you will receive the 1099.

The office said I can deduct the amount I give to them. Is this true? What type of expense? What type of documentation would I need in case of an audit to prove this expense?

How does your contract define the payment back to them, rent? If so, it's rent expense. Your contract should define what this payment is and that's how you'll know how to report it. Yes, it should be deductible. Your proof if audited will be your contract and your cancelled checks.

I’m trying to plan now since my first Medicaid check is on its way.

As long as you're depositing ALL of your income, don't worry about what the 1099 says. It sounds like your gross income will exceed that since you're also getting income from other sources. Simply report ALL of your income and make sure you take every bit of deductible expenses you can and you'll be fine. DOCUMENTATION IS THE KEY.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at tlott@dentalcpas.com

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