I’m hoping some tax professionals can sanity-check a situation that feels off.
My wife is a certified craniosacral therapist (unlicensed in our state) and provides therapeutic bodywork to a client. The client is also a psychotherapist. These sessions were explicitly discussed and agreed to as treatment, not training, supervision, consulting, or education. My wife charges a higher rate for consulting/training, and that was not what this arrangement was.
The client has now requested that my wife provide a W-9, saying she plans to issue a 1099 so she can deduct the sessions as an educational expense. The client says her husband is an accountant and that this is “totally normal.”
Concerns on our end:
- This seems to let the client define the nature of the service for tax purposes, rather than the provider.
- My wife is uncomfortable providing her SSN and being pulled into a potential audit trail for something that was not education or training.
- From what I can find, issuing a 1099 requires the payment to be for services in the course of the payer’s trade or business, and the service description needs to be accurate.
- If the service was therapy, not instruction, calling it “education” feels incorrect at best.
My wife has asked several colleagues; almost all say this is not normal, with one exception who said they’ve done it.
Questions:
- Is it appropriate for a client to issue a 1099 for personal therapeutic services simply because they want to deduct it as education?
- Who determines the classification of the service for IRS purposes—the payer or the provider?
- Is refusing to provide a W-9 reasonable in this situation?
- Are there audit or liability risks for the provider if the client misclassifies the service?
Not looking for legal advice, just trying to understand what’s actually correct here from a tax standpoint.
Thanks in advance.
(cross posted)
Client requesting W-9 for bodywork sessions to issue a 1099 as “education” — is this actually proper?
byu/moon-and-sea intax
Posted by moon-and-sea
6 Comments
The client is being shady.
That said, I don’t think this is on your wife to police it. She should probably just give them the w9 and let them go as a client.
It is not appropriate for a client to issue a 1099 for personal services. The [1099-NEC instructions](https://www.irs.gov/instructions/i1099mec) very clearly state that only businesses issue 1099s. It’s the first sentence under the “Specific Instructions for Form 1099-NEC” header:
> File Form 1099-NEC, Nonemployee Compensation, for each person **in the course of your business** to whom you have paid…
(emphasis mine)
So, your wife could reasonably refuse to provide a W-9, because she did not provide services to this client’s business.
However, what the client does on their return doesn’t really affect your wife’s return. She could fill out the W-9 on the general principle of “you should fill out W-9s when folks ask you to”. She could be clear in her invoice/receipt for services that this was personal and not educational, though she doesn’t have to. Whether and how this client commits tax fraud doesn’t really change anything for your wife.
Your wife should probably obtain an EIN for her self-employment so that she doesn’t have to give vendors and such her SSN. (Yes, she can do this even without setting up an LLC. She’ll enter the EIN on her Sch C when she files, and she can use that EIN when filling out W-9s and issuing 1099s, and otherwise she ignores it.)
It’s fine if you provide a W9 or not as you are going to report that gross income on your tax return anyway. What the client chooses to do with their expense is totally up to them. That said, body work is never a deductible expense for most businesses regardless of how they choose to “write it off” 1099 or not. Nothing will impact you or your wife, so don’t worry about it.
As long as your wife reports the income everything is fine on your side. If your wife is okay losing this client, I would not be inclined to provide a W-9 with PPI. Who issued the payments in the first place? A business entity (including a professional corp) or the client as an individual? For disbursements by a trade/business, W-9s are supposed to be obtained prior to issuing payment (especially in case it is necessary to collect backup withholding if the payee refuses to provide an accurate/acceptable one). This sounds like last minute “creativity” and I wouldn’t collude with them.
Who cares give her a w9 and keep cashing checks. If you don’t want togive out ssns, get an ein
Probably worth getting an EIN, then she can fill out the W9 without providing her SSN.