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Question about consultant work (Tax/401k experts welcomed)
Posted on 10/22/17 at 9:16 pm
Posted on 10/22/17 at 9:16 pm
I have a consulting business (research and data oriented) that has really taken off in the last 18 months. I have a couple of really good contracts and things are going well enough for me to feel like I will be continuing them in the coming years, in addition to new business.
Looking at the numbers at the end of the 3Q for tax year 2017, I appear to be screwed tax wise and I wish to avoid paying as much tax as possible.
Can I start a self employed 401k? If so, what is the max contribution? Can I make my wife an employee and contribute in her name? My oldest daughter is 11 - can I fund something for her? (I already fund 529 plans for each of my two children, although I am considering the $2000 ESA)
I have already fully funded $5500 for each of us into a traditional IRA. I need somewhere to shelter another $30k or so. We live on my professor salary (in which I receive a match toward a 403b) and 90% of this consulting income is going toward savings.
Looking at the numbers at the end of the 3Q for tax year 2017, I appear to be screwed tax wise and I wish to avoid paying as much tax as possible.
Can I start a self employed 401k? If so, what is the max contribution? Can I make my wife an employee and contribute in her name? My oldest daughter is 11 - can I fund something for her? (I already fund 529 plans for each of my two children, although I am considering the $2000 ESA)
I have already fully funded $5500 for each of us into a traditional IRA. I need somewhere to shelter another $30k or so. We live on my professor salary (in which I receive a match toward a 403b) and 90% of this consulting income is going toward savings.
This post was edited on 10/22/17 at 9:17 pm
5
Posted on 10/22/17 at 10:12 pm to anc
I'm not sure about the self 401k. I did a consulting gig several years ago and I contributed to a SEP IRA. I don't know what the rules/limits are now, but it saved me a bunch of taxes back then.
Posted on 10/23/17 at 4:48 am to anc
Since you have a 403b, the 401k is not the way to go.
Do you have access to a 457 plan?
Most universities do. I put max in 403b and 457 plans.
I also have a consulting business and I fund a SEP IRA for this.
Do you have access to a 457 plan?
Most universities do. I put max in 403b and 457 plans.
I also have a consulting business and I fund a SEP IRA for this.
Posted on 10/23/17 at 6:43 am to anc
You need to setup a SEP IRA-- clock is ticking
Call your CPA today---you do have a CPA?
Call your CPA today---you do have a CPA?
This post was edited on 10/23/17 at 6:45 am
Posted on 10/23/17 at 7:36 am to anc
Yes, you can still set up an individual 401k for 2017. $18,000 plus 20-25% match depending on your corporate structure.
Only if your wife actually does something for your company. Nothing for your daughter unless she has earned income - which isn't likely that she claims any.
It sure sounds like you are making too much (with access to a company plan) to be taking tax deductions on those IRA's... That's ok, google "back door roth ira" and study up.
Only if your wife actually does something for your company. Nothing for your daughter unless she has earned income - which isn't likely that she claims any.
It sure sounds like you are making too much (with access to a company plan) to be taking tax deductions on those IRA's... That's ok, google "back door roth ira" and study up.
Posted on 10/23/17 at 10:19 am to anc
401k/403b/457 are all combined together for purposes of the maximum deferrals as well as total additions. Depending on how much you are putting into the 403b and what the match is... this may cause some issues.
SEP is the kinda traditional option for self-employeds, and SEP contributions are not aggregated with 401k/403b/457 plans for limits. However, SEP plans you are limited to 20 percent of your business earnings.
Solo 401k is awesome when you want to shelter more than what the 20 percent in a SEP will allow.
Having employees adds another flexibilty/complexity. Your child is too young. What would your wife do?
If you don't have a CPA... now is the time to get one.
SEP is the kinda traditional option for self-employeds, and SEP contributions are not aggregated with 401k/403b/457 plans for limits. However, SEP plans you are limited to 20 percent of your business earnings.
Solo 401k is awesome when you want to shelter more than what the 20 percent in a SEP will allow.
Having employees adds another flexibilty/complexity. Your child is too young. What would your wife do?
If you don't have a CPA... now is the time to get one.
Posted on 10/23/17 at 10:49 am to LSUFanHouston
quote:
If you don't have a CPA... now is the time to get one.
I told my wife the same thing. Going to have to bite the bullet and hire a CPA. It has gotten too complicated for me.
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