Should I incorporate my 1099 income?

Suppose to pay a reasonable salary in an s-corp so technically the IRS could come back and slap SE tax on u

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What is the nature of this income, if I might ask?

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Residuals from insurance sales. Basically I get a percentage of the annual premiums of every policy I ever sold that's still in force, it's paid weekly as policies renew. It'll eventually taper off, but it's only dropped about $2K in the last 2 1/2 years.

Talk to an accountant about a hybrid s & corp.

Pay an atty 1k to set it up.

I would look into a few things:

- Are you sure this is "earned income" and cannot be considered a cap gain, dividend, etc. Sounds like income, but just checking.
- With income to report, do you also have expenses that are not being reported? After all, it's business income. It's not reasonable to assume that you spend no time, money, energy, percentage of house, etc. to managing it. Even a closet with records is something. If you need a computer, pay for an accountant, etc., it's not zero.
- Have you looked at a solo 401k if you have not reached the federal 401k limit ($66k under 50)? This may not off-set net earnings like a below the line deduction, but it will get the state and federal out of it. If you are over the $160,200 social security cap, this is less of an issue, as well. It's still better to deduct it away, but this will at least defer the tax bill now.
- Does it make sense to increase some of your activity in this old business now, but not to the point it's a burden? This is great to legitimize deductions. You already have the income. So, there is little chance your business is going to show a loss, which is a problem for folks who make the mistake of starting businesses just to "claim deductions."

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I’ve also found great tax savings with real estate investments that give you a K1. A $50,000 investment saved my $17,000 in 1099 taxes last year and the investment itself is profitable. I use Boardwalk Wealth. Maybe this isn’t worth it to you on $50,000 but it’s definitely worth it to me on my 1099 income.

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How does this work?

meh. look i love having a corporation and being taxed as an S-corp as it saves me gobs of money....but being you are an W2 for somebody else already.....ugh. look for some other way to get that money into tax deferred accounts.

i would not do an S-corp for that. you would be better served IF that money was classified as portfolio income or passive income then you would not have to worry about SE tax(unless you get hit with additional tax based on income for the portfolio side). but since it is EARNED income you are screwed. I would just try to mitigate as much tax as you can and leave as is. especially if these amounts will keep dropping.

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Either way you going to file it on a Schedule C. Even if you set up a Sub S or an LLC it will still be filed same way

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100 percent incorrect. S Corp does not use Schedule C. S corp requires it's own tax return, a K-1 to the individiual, and payroll tax returns.

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nd you still have the same deductions, which is probably nothing since its trails.

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Now this is correct.

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Look at max out a SEP.

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I would look at a solo401. Can write off more if you don’t need it. You can actually deduct your entire $50k with the solo.

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have a CPA and you got first year accelerated bonus depreciation in 2022 on property. Consult your tax advisor.

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But how did you “save” $17k in taxes with a $50k investment in the same year? You can’t take a deduction for depreciation that’s above your real estate income, right?

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I had income from two rentals but I let my CPA worry about that. I also have an LLC generating over 200k a year outside my W2.

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I’m about 99% positive that the firm you mentioned for the investment can only help you offset passive income, and obviously that depreciation doesn’t forever. Keep us posted on how the new investment “helps”.