Tax deductions

[EctopicFetus]

The IRS sets the salary as reasonable for your profession. I would talk to a CPA and I would guess you could set your EM salary at 250-300k. So everything you make above that would be a savings. Keep in mind to the IRS it would look like a new corporation. You could also employ your spouse (if they are unemployed), your kids when they do work on your behalf for your LLC which would allow you to deduct their salary but they would have to pay no SS/medciare/unemployemnt or income tax (as long as their pay is low enough) and you can then invest that money the kids earn in a Roth IRA. NO taxes ever!

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[Hercules]

$5800

I've never incorporated because I was under the false impression that the tax deductions would be eliminated soon and it offered no malpractice coverage. Now I realize over 10 years I've wasted at least $100,000 in taxes I've sent to the IRS.

What happens if I incorporate now? I don't think I can pay myself a salary less than what I'm making now as I've probably already set precedent for my hourly rate. So what would be the benefits?

For the new grads, it's probably best to go ahead and establish it as soon as you graduate and don't be like me. Precedent is hard to overcome. If Biden wins the presidency and gets his way, the income limit on SS/Medicare taxes (payroll) will be eliminated. That means even more paid in taxes -- 15% if you're self-employed.

You would need to speak with your accountant, but I don’t believe precedent has much to do with it. In general it has to be a reasonable wage. For our group we look at the reasonable wage being paid in our area and make sure to keep our hourly w-2 at that range while we pay the rest out as a partner distribution. It has added up to a pretty significant tax savings over the years.

 

[GeneralVeers]

I found there wasn't a huge savings by doing the S-corp route. I was able to save about $6000 per year on

Do your due diligence depending on your state. In TN there is an excise tax to make up for the lack of state income tax on distributions. I had an s-corp for several years and it was a monstrous headache. My CPA fees were much higher than a sole proprietorship. I got rid of it and never looked back. I may be losing a small amount of money but it just wasn't worth it to me. My CPA agreed. He said In my case an s-corp was good for him, but not for me. I suppose I might revisit the topic with him if Biden is elected.

This. The cost to file taxes for an S-corp were huge, as was the time involved collecting documents, and dealing with the payroll compay. It probably only saved me net $2-3K after accountant fees, but the time and headache involved simply made it not worth it. I'd rather just work one or two extra shifts to make up for this.

 

[southerndoc]

I found there wasn't a huge savings by doing the S-corp route. I was able to save about $6000 per year on


This. The cost to file taxes for an S-corp were huge, as was the time involved collecting documents, and dealing with the payroll compay. It probably only saved me net $2-3K after accountant fees, but the time and headache involved simply made it not worth it. I'd rather just work one or two extra shifts to make up for this.

Thanks, this just reiterated not doing it. I have too much going on with life now to worry about more work. Granted, an accountant takes care of the majority of it, but there will still be increased work load on my end.

 

[cyanide12345678]

$5800

I've never incorporated because I was under the false impression that the tax deductions would be eliminated soon and it offered no malpractice coverage. Now I realize over 10 years I've wasted at least $100,000 in taxes I've sent to the IRS.

What happens if I incorporate now? I don't think I can pay myself a salary less than what I'm making now as I've probably already set precedent for my hourly rate. So what would be the benefits?

For the new grads, it's probably best to go ahead and establish it as soon as you graduate and don't be like me. Precedent is hard to overcome. If Biden wins the presidency and gets his way, the income limit on SS/Medicare taxes (payroll) will be eliminated. That means even more paid in taxes -- 15% if you're self-employed.

Extra accounting cost of roughly 1000-1700 dollars plus payroll cost of around $500/yr.

So eventually the money saved is around 4k.

My llc is taxed as s corp. The biggest question i had last year was whether the 199a deduction was reduced because the business now had a wage expense of my w2, so profit was lower due to increased expenses for the business and 199a deduction was lower as a result.

 

[dpmd]

2.9% on 200k isn’t small. Whether or not it is worth it is a different question. I’m not a 1099 but having an llc May allow you to more easily employ a spouse and kids which may lead to tax savings / Backdoor ira contributions. We are getting deep in the weeds here.

Nope. You can employ people including family as sole proprietor. If it is just a spouse the irs will let you be a partnership without having to do partnership tax forms. Means you could both do solo 401k and put away much more tax advantaged money for retirement.

 

[turkeyjerky]

Nope. You can employ people including family as sole proprietor. If it is just a spouse the irs will let you be a partnership without having to do partnership tax forms. Means you could both do solo 401k and put away much more tax advantaged money for retirement.

Seriously? I imagine you'd have to pay the SS and medicare taxes for spouse, and make > 500k to fully max both 401ks...but still might be worth it.

 

[dpmd]

Seriously? I imagine you'd have to pay the SS and medicare taxes for spouse, and make > 500k to fully max both 401ks...but still might be worth it.

The way I did it was designate enough income to me to max my 401k, and then designate the rest to him and maxed the employee contribution and whatever the employer contribution calculated out to from the income. Didn't calculate whether the money I saved from decreasing my taxable income was more or less than the medicare and ss taxes I had to pay because of it.

 

[veaselhaufen]

The way I did it was designate enough income to me to max my 401k, and then designate the rest to him and maxed the employee contribution and whatever the employer contribution calculated out to from the income. Didn't calculate whether the money I saved from decreasing my taxable income was more or less than the medicare and ss taxes I had to pay because of it.

What job are you giving to spouses to qualify for this?

 

[dpmd]

What job are you giving to spouses to qualify for this?

IRS rules just require (1) the only members of the joint venture are a married couple who file a joint tax return, (2) both spouses materially participate in the trade or business, (3) both spouses elect to have the provision apply, and the business is co-owned by both spouses and (4) isn't held in the name of a state law entity such as a partnership or limited liability company (LLC). Material participation has some additional description in the related tax pub that involves minimum hours and some other stuff. If the IRS asks he answered phone calls, maintained my operative database which tracks complications and other stuff, and stuff like that. The years I did that were when he wasn't working another job and he was an lvn at that time so the amount of money designated as his interest was a reasonable amount. Now that he has a full time job I no longer do that because it would be harder to show material participation.

 

[dpmd]

And I misspoke above. It is self employment taxes that are paid on the spousal income, not specifically medicare and ss like employees. So by splitting it instead of keeping it all for myself the amount of the self employment tax stays the same except for more stays eligible for the higher rate but that also means they get credit towards social security that they wouldn't otherwise for that year if they didn't work.

 

[EctopicFetus]

Nope. You can employ people including family as sole proprietor. If it is just a spouse the irs will let you be a partnership without having to do partnership tax forms. Means you could both do solo 401k and put away much more tax advantaged money for retirement.

As you mentioned below has to be a spouse.how about employing kids which is the real win as you avoid all taxes.

 

[EctopicFetus]

And I misspoke above. It is self employment taxes that are paid on the spousal income, not specifically medicare and ss like employees. So by splitting it instead of keeping it all for myself the amount of the self employment tax stays the same except for more stays eligible for the higher rate but that also means they get credit towards social security that they wouldn't otherwise for that year if they didn't work.

Wouldn’t this negate much of the benefit? I mean I get doing it enough to get some retirement benefits. The beauty of kids is no tax at all. When older they can do some really helpful things. Lots of rules but lots of benefits.

 

[dpmd]

As you mentioned below has to be a spouse.how about employing kids which is the real win as you avoid all taxes.

For kids you would just employ them. Still possible as a sole proprietor.

 

[Mbekweni]

I just talked to my accountant and worked up a bit of a plan, where it would in fact be beneficial to go S corp- even while in CA. However I'm currently in a high earning phase. Net benefit for me would be about 4k after accounting for the CA franchise tax and increased fees needing to pay the accountant. However I have well above average income so at "standard" EM of 300-400k likely the 1-2k benefit and may not be worth the extra hassle. Additional benefit of going S corp is that you can have you S corp rent your private residence from yourself for group entertainment and meetings. Just need to carefully document what was talked about and who was there. Get comps from local hotel meeting rooms, restaurants with private rooms and minimum spend. You can usually take a 1-2k deduction per day used and get 15 days per year of renting your main residence income tax free. This greatly expands the benefit of S corp. You just need to be able to clearly justify it. I'm a director for our physician group, and have other hospital admin roles so quite defensible.

Other deductions that I have found after extensive research these last few months in order from obvious to more esoteric:
- Max 401k, obviously.
- Max HSA if you have high deductible health plan
- Set up defined benefit plan or use group DBP
(Above should easily get you to 80k+, and well over 150k if you have a private DBP)

- Vehicle deductions. Can't deduct mileage commuting from home but commuting from home office to hospital is deductible. Need a defensible reason for home office ie telemedicine, admin work etc. Some neat tricks in there ie buying a vehicle in December and driving it 100% for business that month. You can then take a 179 deduction on the whole price of the vehicle if it's over 6000 lbs (ie Tesla Model X, BMW X5, Range Rover Etc). That gets you about 50% off right there and you can deduct the whole amount. If a smaller vehicle is your thing, then current tax law allows you to take accelerated depreciation of 18k first year, 16k year 2 etc. Keep in mind if you do anything other than straight line depreciation or milage deductions cars are listed property so you have to maintain >50% business use for 5 years to avoid paying recapture. After 5 year can give to family member etc and move on to the next one. You can sell the vehicle for below market rate ie to friends or family to avoid having to pay recapture and keeping sales price at the level you have depreciated to and give family a deal.
- Cell phone (My accountant recommended max 90%), home office, scrubs, work shoes, stethoscope other basic equipment
- CME, LLSA, hospital medical staff dues, DEA, state license and other obvious stuff
- Business meals: Even if you are our with friends from work this counts as we all talk about work and interesting cases anyways. Similarly if you are out with work friends for other events "ie group retreats" to winery, golfing with CMO etc. Use an app like Expensify and take a photo of the receipt for deductions later.
- Business travel: Conferences, job interview etc make flight and hotel deductible. American Seminar Institute is shady and stretching the letter or the law but you can get a CME certificate from anywhere and any duration of trip. I know a lot of people who have done this, but seems too shady for me.

- Real estate: Best combined if you have a spouse who is working part time. Get them real estate professional status (declared on tax return). This allows you to take an income property and do cost segregation and then accelerated depreciation which because of the REPS can be deducted against the higher earners other income, dramatically lowering the initial acquisition costs of a property and rehab costs. See Semi Retired MD website for more explanation.
- Can have rental real estate in vacation spot that you can inspect and maintain when you travel there to make your trip totally deductible in addition to the income produced. Bonus if this is in a no/low income tax state for further tax arbitrage so you can retire there and withdraw all those pre tax savings at an even lower rate.
- Conservation easements: Very complex and require careful record keeping and assessments. Beware of those selling you a syndicated conservation easement as these are listed transactions with the IRS and asking for audit. However if you want to buy a nice piece of country property you can set aside a large portion if it for conservation and ensure it can't be developed (hey...it's why you would want the property for the open space right?). You can have a portion still excluded ie for a primary residence. The rest can then be deducted as if you were going to develop it minus the purchase price for the raw land. The difference can frequently be 4x your purchase price in deductions and essentially negate the purchase price of the initial property if you can deduct it against several years in a row of high income. Aside from simply losing a ton of money in his businesses, this was the most common tax deduction/charitable contribution by Trump.
- Given current low interest rates and if you have a one time liquidity event or high income year plus feal charitably inclined there has never been a better time to set up a Charitable Lead Trust. Donor Advised Fund is less complex and my preference but I've been thinking about the former a bit for this year or next.

Hope that helps!

 

[dpmd]

I just talked to my accountant and worked up a bit of a plan, where it would in fact be beneficial to go S corp- even while in CA. However I'm currently in a high earning phase. Net benefit for me would be about 4k after accounting for the CA franchise tax and increased taxes needing to pay the accountant. However I have well above average income so at "standard" EM of 300-400k likely the 1-2k benefit and may not be worth the extra hassle. Additional benefit of going S corp is that you can have you S corp rent your private residence from yourself for group entertainment and meetings. Just need to carefully document what was talked about and who was there. Get comps from local hotel meeting rooms, restaurants with private rooms and minimum spend. You can usually take a 1-2k deduction per day used and get 15 days per year of renting your main residence income tax free. This greatly expands the benefit of S corp. You just need to be able to clearly justify it. I'm a director for our physician group, and have other hospital admin roles so quite defensible.

Other deductions that I have found after extensive research these last few months in order from obvious to more esoteric:
- Max 401k, obviously.
- Max HSA if you have high deductible health plan
- Set up defined benefit plan or use group DBP
(Above should easily get you to 80k+, and well over 150k if you have a private DBP)

- Vehicle deductions. Can't deduct mileage commuting from home but commuting from home office to hospital is deductible. Need a defensible reason for home office ie telemedicine, admin work etc. Some neat tricks in there ie buying a vehicle in December and driving it 100% for business that month. You can then take a 179 deduction on the whole price of the vehicle if it's over 6000 lbs (ie Tesla Model X, BMW X5, Range Rover Etc). That gets you about 50% off right there and you can deduct the whole amount. If a smaller vehicle is your thing, then current tax law allows you to take accelerated depreciation of 18k first year, 16k year 2 etc. Keep in mind if you do anything other than straight line depreciation or milage deductions cars are listed property so you have to maintain >50% business use for 5 years to avoid paying recapture. After 5 year can give to family member etc and move on to the next one. You can sell the vehicle for below market rate ie to friends or family to avoid having to pay recapture and keeping sales price at the level you have depreciated to and give family a deal.
- Cell phone (My accountant recommended max 90%), home office, scrubs, work shoes, stethoscope other basic equipment
- CME, LLSA, hospital medical staff dues, DEA, state license and other obvious stuff
- Business meals: Even if you are our with friends from work this counts as we all talk about work and interesting cases anyways. Similarly if you are out with work friends for other events "ie group retreats" to winery, golfing with CMO etc. Use an app like Expensify and take a photo of the receipt for deductions later.
- Business travel: Conferences, job interview etc make flight and hotel deductible. American Seminar Institute is shady and stretching the letter or the law but you can get a CME certificate from anywhere and any duration of trip. I know a lot of people who have done this, but seems too shady for me.

- Real estate: Best combined if you have a spouse who is working part time. Get them real estate professional status (declared on tax return). This allows you to take an income property and do cost segregation and then accelerated depreciation which because of the REPS can be deducted against the higher earners other income, dramatically lowering the initial acquisition costs of a property and rehab costs. See Semi Retired MD website for more explanation.
- Can have rental real estate in vacation spot that you can inspect and maintain when you travel there to make your trip totally deductible in addition to the income produced. Bonus if this is in a no/low income tax state for further tax arbitrage so you can retire there and withdraw all those pre tax savings at an even lower rate.
- Conservation easements: Very complex and require careful record keeping and assessments. Beware of those selling you a syndicated conservation easement as these are listed transactions with the IRS and asking for audit. However if you want to buy a nice piece of country property you can set aside a large portion if it for conservation and ensure it can't be developed (hey...it's why you would want the property for the open space right?). You can have a portion still excluded ie for a primary residence. The rest can then be deducted as if you were going to develop it minus the purchase price for the raw land. The difference can frequently be 4x your purchase price in deductions and essentially negate the purchase price of the initial property if you can deduct it against several years in a row of high income. Aside from simply losing a ton of money in his businesses, this was the most common tax deduction/charitable contribution by Trump.
- Given current low interest rates and if you have a one time liquidity event or high income year plus feal charitably inclined there has never been a better time to set up a Charitable Lead Trust. Donor Advised Fund is less complex and my preference but I've been thinking about the former a bit for this year or next.

Hope that helps!

All of this (minus the real estate stuff) can be done as a sole proprietor. Just so others here know.

 

[Mbekweni]

All of this (minus the real estate stuff) can be done as a sole proprietor. Just so others here know.

Except for your S corp renting your primary residence. That can be worth an extra 10-20k a year in deductions depending on how you work it.

 

[dpmd]

Except for your S corp renting your primary residence. That can be worth an extra 10-20k a year in deductions depending on how you work it.

I lumped that into the other shady real estate stuff.

 

[thegenius]

How much are your accountants charging?? Man ol’ mighty...
We have 2x LLC an S-Corp.
We made 439k last year.
Sent In 102k in taxes.

Also, do not add home expenses or part of your home as deduction.. unless you plan on losing that increased value section of your home to capital gains tax...

PM me if you want our accountant information.

I had an S-Corp, well technically still do but I reverted back to a 1099.

There is a QBI (Qualified Business Deduction) that 1099, sole prop, S-Corp, C-Corp, LLC can take. As the result of me paying myself a salary and a W2 from my S-Corp, it markedly reduced by QBI. I paid an extra 20K taxes last year. Even my accountant said I should just go back to a 1099.

So I did.

BTW, my accountant charges like $65/month to do payroll, about $35 extra to do quarterly S-Corp stuff, and about $1300 to do my personal and S-Corp year end tax return. From what I know these are not really expensive, but ain't cheap.

 

[thegenius]

As you mentioned below has to be a spouse.how about employing kids which is the real win as you avoid all taxes.

they can be models.

 

[EctopicFetus]

they can be models.

Yep or help with office work depending on age.

 

[dpmd]

So I'm a pharmD and my spouse a W2, but also has a 1099 admin gig. If I (pharmacist) help him (schedule, manage ce, taxes, etc) and he pays me a salary, I can contribute that to an individual 401k? I contribute the max thru my full time gig, but i don't hit the 54K since my employer contributon is only 7% of my salary (so contribute approx 30k/year) leaving about 20k on the table

Yes but not a w2 salary. The combined limit still applies but if your contributions with the w2 job are under the limit (57000 for 2020 if you are under 50) then you can do the rest or what your share of the business income entitles you to (there are good calculators online for this). If you already max the employee portion with your w2 job you are limited to 20% of net self employment income for the employer contribution.

 

[mega_colon]

I'm a new attending, want to make sure my plan sounds reasonable. My spouse doesn't work and I am W2 at my full time job with a decent amount of 1099 income from moonlighting.

I'm planning on maxing my employee contribution to my 403b at my full time gig with my hospital matching 2% so only like 7-10k annually in addition to my 19.5k employee contribution.

Then setting up solo 401k's for myself and my non working spouse. Will max out my spouse's employee contribution through this and then whatever is left of my $57k limit I can take 20% of my remaining 1099 income and put that in my solo 401k.

Does this sound reasonable?

 

[cyanide12345678]

I'm a new attending, want to make sure my plan sounds reasonable. My spouse doesn't work and I am W2 at my full time job with a decent amount of 1099 income from moonlighting.

I'm planning on maxing my employee contribution to my 403b at my full time gig with my hospital matching 2% so only like 7-10k annually in addition to my 19.5k employee contribution.

Then setting up solo 401k's for myself and my non working spouse. Will max out my spouse's employee contribution through this and then whatever is left of my $57k limit I can take 20% of my remaining 1099 income and put that in my solo 401k.

Does this sound reasonable?

Is your spouse going to be an employee of your 1099 business?

Are you willing to pay extra in social security taxes that you would have already maxed otherwise if that income stayed yours? It's a great strategy if cap on social security taxes are removed, but otherwise you are actually paying more in taxes for extra deferred investing space.

May i suggest doing a 12k contribution into a backdoor roth first?

 

[mega_colon]

Is your spouse going to be an employee of your 1099 business?

Are you willing to pay extra in social security taxes that you would have already maxed otherwise if that income stayed yours? It's a great strategy if cap on social security taxes are removed, but otherwise you are actually paying more in taxes for extra deferred investing space.

May i suggest doing a 12k contribution into a backdoor roth first?

Yes my wife doesnt work so Im thinking I would just generate a W2 for her for $19,500, she already handles most of my day to day stuff anyways.

I’m still researching my options with my non tax deferred accounts.

 

[dpmd]

Yes my wife doesnt work so Im thinking I would just generate a W2 for her for $19,500, she already handles most of my day to day stuff anyways.

I’m still researching my options with my non tax deferred accounts.

She doesn't have to be w2. If she materially participates in the business then you can treat it like a partnership but since she is your spouse you don't have to file partnership taxes. You just designate her share of the revenue based on her participation and she files a schedule c along with yours with each reporting your portion of revenue and expenses. Then she can put aside the employer portion as well as the employee portion depending on how much income you designate as hers. You end up paying social security taxes that maybe you wouldn't have paid but now she gets credit for those years assuming the system is still paying out when she retires.

 

[HoosierdaddyO]

I guess this is a good forum to piggy back onto, without having to create a brand new one.

So I’m a w2 at my primary hospital and just recently starting picking up 2 shifts a month at a secondary hospital where I will be getting paid hourly without any bennies etc. getting income from two shifts a month from this other hospital... does it make sense to set up an S Corp or LLC etc. I’m new to the game of business etc but any tax advantages or monetary advantages that could be gained by this new 2 shift a month opportunity?

 

[Fox800]

I guess this is a good forum to piggy back onto, without having to create a brand new one.

So I’m a w2 at my primary hospital and just recently starting picking up 2 shifts a month at a secondary hospital where I will be getting paid hourly without any bennies etc. getting income from two shifts a month from this other hospital... does it make sense to set up an S Corp or LLC etc. I’m new to the game of business etc but any tax advantages or monetary advantages that could be gained by this new 2 shift a month opportunity?

No need for an S-Corp or to incorporate. S-corps don’t make sense until your income from that job gets around $400,000 per year. Below that, you don’t save (and will probably lose) money.

 

[EctopicFetus]

Is that job w-2 or 1099. Agree no reason to set up LLC but might be able to write off some expenses like cell phone/internet etc.

I guess this is a good forum to piggy back onto, without having to create a brand new one.

So I’m a w2 at my primary hospital and just recently starting picking up 2 shifts a month at a secondary hospital where I will be getting paid hourly without any bennies etc. getting income from two shifts a month from this other hospital... does it make sense to set up an S Corp or LLC etc. I’m new to the game of business etc but any tax advantages or monetary advantages that could be gained by this new 2 shift a month opportunity?

 

[bravotwozero]

what happens to your 401k contribution limits if you have a both a W-2 and a 1099 job? I know you can max out 57k on a solo 401k as IC, but how is this impacted if also have a w-2 gig on top of that?

 

[hundreddaysoff]

what happens to your 401k contribution limits if you have a both a W-2 and a 1099 job? I know you can max out 57k on a solo 401k as IC, but how is this impacted if also have a w-2 gig on top of that?

Went through this a couple years ago when I was a moonlighting resident.

The answer is that you only get one employEE contribution of $19.5k no matter how many jobs you work. But if you have multiple jobs offering an employER contribution, then you are allowed to take those multiple employER contributions as long as the employment follows certain rules.

See Example 3 here:

Can You Have More Than One 401(k)? Yes, Here's How! | White Coat Investor

Guess what? You can have multiple 401(k) accounts, saving you thousands in additional taxes every year. But it gets pretty complicated. Here are the rules.

www.whitecoatinvestor.com

Your 57k figure likely includes both the employEE and employER contributions. So unless your W-2 has an employER contribution, short answer is your $57k total contribution limit probably wouldn't change.

 

[HoosierdaddyO]

Is that job w-2 or 1099. Agree no reason to set up LLC but might be able to write off some expenses like cell phone/internet etc.

Yea so the second job would be a 1099/IC status... so not sure what exact benefits I could use or write off etc. mileage on the car? Internet? Cell phone? Etc? Any advice is appreciated!!

 

[turkeyjerky]

Yea so the second job would be a 1099/IC status... so not sure what exact benefits I could use or write off etc. mileage on the car? Internet? Cell phone? Etc? Any advice is appreciated!!

Personally, I'm wary of writing off "business" expenses like cell phone, internet or home office. Technically, this stuff needs to be strictly used for work in order to be deductable. Mileage and other travel expenses (stuff like meal per diem or hotel if your going far) are easy and reasonable.

 

[dpmd]

Personally, I'm wary of writing off "business" expenses like cell phone, internet or home office. Technically, this stuff needs to be strictly used for work in order to be deductable. Mileage and other travel expenses (stuff like meal per diem or hotel if your going far) are easy and reasonable.

Doesn't have to be exclusive use as long as you track the use and report the percentage of time it is used appropriately (except the home office which has to be exclusive use but if you have a separate room how is the government going to prove your use wasn't exclusive to overturn your deduction)

 

[EctopicFetus]

A

Doesn't have to be exclusive use as long as you track the use and report the percentage of time it is used appropriately (except the home office which has to be exclusive use but if you have a separate room how is the government going to prove your use wasn't exclusive to overturn your deduction)

also not true. that's the old way. you can write off all internet and YOUR phone (not your family). It doesn't have to be a share of it. Get a good CPA who works with ICs and they can walk you through it. Most CPAs I have met are fairly lazy and not super knowledgeable and are better at yes or no answers rather than by helping you with tax strategies.

 

[dpmd]

A

also not true. that's the old way. you can write off all internet and YOUR phone (not your family). It doesn't have to be a share of it. Get a good CPA who works with ICs and they can walk you through it. Most CPAs I have met are fairly lazy and not super knowledgeable and are better at yes or no answers rather than by helping you with tax strategies.

Argh. Decided to rely on memory instead of looking it up. I do my own taxes using turbo tax and it walks you through all of that. I thought it asked about usage but that might have been years ago or I might have been thinking of my car (for which tracking work versus other mileage is important).

 

[v4runc00l]

Went through this a couple years ago when I was a moonlighting resident.

The answer is that you only get one employEE contribution of $19.5k no matter how many jobs you work. But if you have multiple jobs offering an employER contribution, then you are allowed to take those multiple employER contributions as long as the employment follows certain rules.

See Example 3 here:

Can You Have More Than One 401(k)? Yes, Here's How! | White Coat Investor

Guess what? You can have multiple 401(k) accounts, saving you thousands in additional taxes every year. But it gets pretty complicated. Here are the rules.

www.whitecoatinvestor.com

Your 57k figure likely includes both the employEE and employER contributions. So unless your W-2 has an employER contribution, short answer is your $57k total contribution limit probably wouldn't change.

So just to clarify this, say I work W2 in which I max out my $19.5k and employER matches an additional $6k (total 25.5k). I then can take my additional 1099 income and add an additional 20% of that into a personal 401k with a max of 31.5k (57k - 25.5k). Is that correct?

 

[GeneralVeers]

So just to clarify this, say I work W2 in which I max out my $19.5k and employER matches an additional $6k (total 25.5k). I then can take my additional 1099 income and add an additional 20% of that into a personal 401k with a max of 31.5k (57k - 25.5k). Is that correct?

Yes that is what I'm doing. Maxed out my employee W2 contribution of $19,500 into my employer's 401K. The remainder of what I'm allowed is going into a SEP IRA from my multiple 1099 sources. Also it's 25% of net earnings and not 20%.

How much can I contribute to my self employed SEP plan if I participate in my employers SIMPLE IRA plan | Internal Revenue Service

We’re Glad You Asked!

www.irs.gov

 

[veaselhaufen]

Yes that is what I'm doing. Maxed out my employee W2 contribution of $19,500 into my employer's 401K. The remainder of what I'm allowed is going into a SEP IRA from my multiple 1099 sources. Also it's 25% of net earnings and not 20%.

How much can I contribute to my self employed SEP plan if I participate in my employers SIMPLE IRA plan | Internal Revenue Service

We’re Glad You Asked!

www.irs.gov

Or you can open a self directed solo 401k where you can put up to 57k into after tax then roll it over to roth IRA. No 25%/20% limit

 

[v4runc00l]

Or you can open a self directed solo 401k where you can put up to 57k into after tax then roll it over to roth IRA. No 25%/20% limit

You can also just leave it into the solo 401k and take the tax deduction, is that correct?

 

[veaselhaufen]

You can also just leave it into the solo 401k and take the tax deduction, is that correct?

After tax contributions are not tax deductible. There would no point in making after tax contributions and not rolling it into a roth account. Remember that dividends and capital gains in roth accounts are not taxable, however. Google around for mega solo backdoor Roth IRA for more info