Have a W2 job and some consulting - tax, investment, other tips?

[Anonymous]

I have my primary job W2 but this year I will have a few thousand as 1099 income for consulting (does this count as self employed?). I have always been a w2 person, max 401K, Roth IRA, do some 529 contributions and save the rest and pay taxes normally.

With this “new” income not sure how to treat it or how to maximize tax advantages? Any tips I should consider? Just pay the quarterly taxes and consider it income or do something special with it? The money is under 10K and not needed but my financial knowledge is not big in this space.

[Anonymous]

There's not much you can do to make your taxes better. Just keep track of your expenses (legit ones) so you can deduct those. Depending on your withholding from your W2 job you might not need to pay quarterly taxes if it's such a small amount of self-employment. Did you owe taxes this year or get a refund?

[Anonymous]

you can set up a solo 401k for your "business", but you should incorporate. Then you and your "business" can contribute to this 401k. That will reduce your tax liability.

I had an LLC for 20 years. Both my spouse and I were on it, and we were able to contribute the max for many years. The last few years of our LLC, we contributed something like $120K combined.

Also, certain types of LLC can get a reduction in taxes via QBI.

[Anonymous]

Anonymous wrote:you can set up a solo 401k for your "business", but you should incorporate. Then you and your "business" can contribute to this 401k. That will reduce your tax liability.

I had an LLC for 20 years. Both my spouse and I were on it, and we were able to contribute the max for many years. The last few years of our LLC, we contributed something like $120K combined.

Also, certain types of LLC can get a reduction in taxes via QBI.

Thank you I’ll look into this we were looking at t sep ira but a 401K self employed is probably better. I was given a refund I’ll do more math to figure out and I have the home office but I’ll try to figure out the applicability.

[Anonymous]

Anonymous wrote:you can set up a solo 401k for your "business", but you should incorporate. Then you and your "business" can contribute to this 401k. That will reduce your tax liability.

I had an LLC for 20 years. Both my spouse and I were on it, and we were able to contribute the max for many years. The last few years of our LLC, we contributed something like $120K combined.

Also, certain types of LLC can get a reduction in taxes via QBI.

You don’t have to incorporate to contribute both employee and employer contributions

[Anonymous]

Anonymous wrote:

Anonymous wrote:you can set up a solo 401k for your "business", but you should incorporate. Then you and your "business" can contribute to this 401k. That will reduce your tax liability.

I had an LLC for 20 years. Both my spouse and I were on it, and we were able to contribute the max for many years. The last few years of our LLC, we contributed something like $120K combined.

Also, certain types of LLC can get a reduction in taxes via QBI.

Thank you I’ll look into this we were looking at t sep ira but a 401K self employed is probably better. I was given a refund I’ll do more math to figure out and I have the home office but I’ll try to figure out the applicability.

Contribution limits for SEP IRA and individual 401(k) are the same. SEP has less paperwork over the long haul in my experience.