W2 job + 1099 locum

[so55b]

I am a hospital employed pain doc. Have been thinking about doing locum anesthesia a couple of times a month given this hot anes job market.

I am not very educated in finance and will be very appreciated if you guys could answer some questions.

Will the 1099 job open the opportunity to contribute a whole IRA contribution (not sure how much) each year? I max out 403b and 457 from my W2 job plus a backdoor IRA.

What about writing off some expenses with this 1099 income? I’ve heard there will be 15% more tax with 1099. Not sure it would be better to take anes calls from my hospital instead so that I get taxed with W2.

Any more suggestions to save some tax money?Thinking about short term rentals to write off my W2 tax. Maybe starting a cow farm as I am in the Midwest lol. I feel like I will be rich much quicker if I could avoid some portion of tax.

Thanks in advance!

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[BobBarker]

Yes, you can load a full 401k. $66k approximately. You won’t have to pay SS tax on this income as you already fully funded that with your day job. You can write off any number of things required to do the 2nd job. Phone, internet, computer, car, fuel, insurance, etc.

 

[CleanUp]

I’m curious what total income does one roughly have to earn with their 1099 income in order to max out a solo 401k?

Assume the W2 is high income and the W2 fills up the employee portion of the 401k.

 

[BobBarker]

It is a separate fund. It doesn’t have anything to do with the existing fund related to the W2 positron.

 

[CleanUp]

It is a separate fund. It doesn’t have anything to do with the existing fund related to the W2 positron.

This is incorrect. A 401k could have an employer or employee contribution. If one works a W2 then the employee part is likely to be maxed out.

 

[BobBarker]

He is self employed. He can fully fund the 401k as he is the business.

 

[CleanUp]

He is self employed. He can fully fund the 401k as he is the business.

He is hospital employed for his W2. For his 1099 he is the employee and employer.

 

[painfree23]

He is self employed. He can fully fund the 401k as he is the business.

20% of net proftits

 

[GatorCHOMPions]

20% of net proftits

This is basically 20% of your 1099 income, right? Assuming you don’t take any business deductions. So if you make 100k from your side gig you can put away 20k, right?

 

[painfree23]

This is basically 20% of your 1099 income, right? Assuming you don’t take any business deductions. So if you make 100k from your side gig you can put away 20k, right?

Yes. But there is a limit (50ish?) on ur employer 401k contribution. I think WCI has a good post about this , I’ll try to dig it up

 

[Status Sciaticus]

Yes, you can load a full 401k. $66k approximately. You won’t have to pay SS tax on this income as you already fully funded that with your day job. You can write off any number of things required to do the 2nd job. Phone, internet, computer, car, fuel, insurance, etc.

Largely correct.
OP is maxing out his 403(b), which means he is maxing out his 20k-ish employee contribution. He cant therefore make any more employee contributions in any account for the year. He can however make employer contributions ($40,500). So assuming he has maxed out his 403(b) - 66k, he can contribute a max of 20% of his 1099 income, up to $40,500.

I’m curious what total income does one roughly have to earn with their 1099 income in order to max out a solo 401k?

Assume the W2 is high income and the W2 fills up the employee portion of the 401k.

20% of your 1099, so youll need about 340k in 1099 money to max out your retirement if you already have a separate W2 job with a maxed out 401k

 

[so55b]

Largely correct.
OP is maxing out his 403(b), which means he is maxing out his 20k-ish employee contribution. He cant therefore make any more employee contributions in any account for the year. He can however make employer contributions ($40,500). So assuming he has maxed out his 403(b) - 66k, he can contribute a max of 20% of his 1099 income, up to $40,500.


20% of your 1099, so youll need about 340k in 1099 money to max out your retirement if you already have a separate W2 job with a maxed out 401k

Thank you, it is more clear now. But as I max out my 403b, I have left 40k-46k more that I can contribute. so I can contribute 40k more to my 401k if my 1099 salary is 200k not 340k? 20% of 200k is 40k right?
What about my 457 contributions? I max it out about 20k a year too. Does it affect total contribution amount?

 

[so55b]

BTW, as other hospitals do, I have an employer match about 20k so 66k- (20k my contribution and 20k employer match) = 26k. I can max out that portion if my 1099 job makes 130k a year.. Not sure if this is correct assumption.

 

[cowboydoc]

Thank you, it is more clear now. But as I max out my 403b, I have left 40k-46k more that I can contribute. so I can contribute 40k more to my 401k if my 1099 salary is 200k not 340k? 20% of 400k is 40k right?
What about my 457 contributions? I max it out about 20k a year too. Does it affect total contribution amount?

The only effect the 457b contribution would have is decreasing your total taxable income by $20k (for your calculations of 20% of total income). Shouldn't impact retirement plan contributions otherwise. (As I understand it)

 

[epidural man]

I am a hospital employed pain doc. Have been thinking about doing locum anesthesia a couple of times a month given this hot anes job market.

I am not very educated in finance and will be very appreciated if you guys could answer some questions.

Will the 1099 job open the opportunity to contribute a whole IRA contribution (not sure how much) each year? I max out 403b and 457 from my W2 job plus a backdoor IRA.

What about writing off some expenses with this 1099 income? I’ve heard there will be 15% more tax with 1099. Not sure it would be better to take anes calls from my hospital instead so that I get taxed with W2.

Any more suggestions to save some tax money?Thinking about short term rentals to write off my W2 tax. Maybe starting a cow farm as I am in the Midwest lol. I feel like I will be rich much quicker if I could avoid some portion of tax.

Thanks in advance!

I have a W2, and a small amount of 1099.

Making an extra 200K on top of a full- time job is not easy - I'd love to hear if you are able to do it. I don't come anywhere near that amount. Let's say you make 350/hr for your per diem job. That is an extra 11 hours a week on top of your full-time job. Ouch.

Let's say you make 75K extra as 1099 - then you will take some business deductions which will knock that down another 15K or so. You would only be able to save ~12K pretax (based on the 20% of net income.)

You may want to consider a defined benefit plan. That allows you to dump much more into a pre-tax fund. However, they are kinda expensive and a pain.

I just closed my defined benefit plan this year. Every time I wrote the check to my actuary, it gave me such heart burn because I'm sure all he does is hit the enter key on his computer.

Also, my 1099 income is dropping, and if I max my HSA, and then use 20%, it's getting closer to the amount I was putting into my defined benefit plan. I was dumping 30K into my defined benefit based on 60K of 1099 income. With the HSA and IRA SEP, that gets me close to 20K. Not as great but I kept thinking the defined benefit plan makes me more of a target for the IRS. I don't know that to be true though - but it felt that way.

 

[BobBarker]

Yes, the actuarial expenses are crazy. Very irritating.

 

[Angler]

I suggested to get my kids to become Actuaries. They just laughed at me. I wasn't joking.