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Independent contractor work-QBI ??


artp

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Taxpayer (Medical doctor) has worked as an independent contractor in CA for Echo Locum Tenens (a staffing provider) since July 2017.  He received a 1099-MISC with the income reported in box 7- non-employee compensation. The contract requires his services for 6-month stints from July-Dec for 2017 and 2018 to perform services at a hospital I CA. For the remaining 6 months each year he was required to work overseas at a hospital in Libera under the HEAL UCSF Global Health Fellowship. For this work he received a W-2 from UCFS. When he returns from Liberia in July 2019, he will finish his last 6-month requirement for Echo Locum Tenens under the current contract and be paid on the 1099-MISC. He expects to continue this working relationship going forward.

 

Question: Does his work as an independent contractor qualify for QBI?

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That is difficult to say definitely. He has lived in IL all his life. After he completed his medical residency in IL in 2017 he entered into this contractual agreement working in LIberia from Jan-Jun each year and in CA from Jul-Dec.   He still maintains his house in IL, pays his mortgage there and still maintains IL drivers license, but has not spent hardly any time there. He has split his time between CA and Liberia. If we treat his tax home as IL, then we have no IL source income to report since he worked in CA for part of the year and in Liberia for the other half, but if we report him with CA tax home, then no expense deduction for living accommodations while working temporarily??  in CA??. Otherwise he has virtually no expenses to offset the income he has to report on Sch C for this contract work. 

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His tax home is where he earns his living. It sounds like CA. Or, an itinerant. (If his tax home were IL, ALL his worldwide income would be reported to IL, his CA income to CA, and a credit for taxes paid to CA on his IL return. But, I don't think his tax home is IL.) And, it's not sounding like temporary, if each contract is for a year. He should have talked to you BEFORE signing a contract. We cannot fix these things after the fact.

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