W2 vs 1099 income

[acidbase1]

would you rather have a job that pays 440k W2 (Med mal, 401k) or 425k 1099 with no benefits? Do the tax benefits outweigh the latter?

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[aneftp]

Depends on the w2 benefits. If it’s a cush government job with generous government side benefits (paid sick days/cme/generous matching 401k/403b/457 and more subsidized healthcare ). Than w2 440k is better

But if it’s amc 440k w2 with no matching or little benefits Than you are better off 420k 1099 cause more tax write offs

 

[caligas]

would you rather have a job that pays 440k W2 (Med mal, 401k) or 425k 1099 with no benefits? Do the tax benefits outweigh the latter?

Well if the w2 income is higher than the 1099 even before benefits, how could you possibly come out ahead with the 1099? It’s like trying to come out ahead by giving money to charity. It’s honorable but you won’t end up with MORE money by donating and getting a tax deduction.

 

[CaliCatheter]

Well if the w2 income is higher than the 1099 even before benefits, how could you possibly come out ahead with the 1099? It’s like trying to come out ahead by giving money to charity. It’s honorable but you won’t end up with MORE money by donating and getting a tax deduction.

Because ur effective tax rate should be lower as 1099. Depending on the state u live n, you need to run the numbers and see which is more beneficial

 

[aneftp]

Well if the w2 income is higher than the 1099 even before benefits, how could you possibly come out ahead with the 1099? It’s like trying to come out ahead by giving money to charity. It’s honorable but you won’t end up with MORE money by donating and getting a tax deduction.

My brother in California puts close to 150k into his self defined benefits plan (self funded) plus the regular business deductions.

U can literally drive ur 420k 1099 income down to around 100-150k easy if u wanted to. So that’s 250-300k less income exposed to both federal
And state income taxes plus less Medicare taxes (0.9% surtax above 200k and Obamacare surtaxes 3.8% on investment taxes).

 

[deleted162650]

Keep in mind, that with 1099 you have to pay the employer portion of the tax also. This question really depends on the structure of the W2. My group pays W2, but we have a DBP (essentially unlimited pretax contribution depending on age) on top of 401k which you can max out at 54k. We can also deduct all business expenses through the group. So in essence, a properly structured W2 set-up can give you the same tax benefits as 1099.

 

[Urzuz]

U can literally drive ur 420k 1099 income down to around 100-150k easy if u wanted to. So that’s 250-300k less income exposed to both federal
And state income taxes plus less Medicare taxes (0.9% surtax above 200k and Obamacare surtaxes 3.8% on investment taxes).

You should have plenty left over too for a great tax lawyer when the IRS audits your greedy a$$

 

[acidbase1]

Because ur effective tax rate should be lower as 1099. Depending on the state u live n, you need to run the numbers and see which is more beneficial

Exactly

 

[acidbase1]

Keep in mind, that with 1099 you have to pay the employer portion of the tax also. This question really depends on the structure of the W2. My group pays W2, but we have a DBP (essentially unlimited pretax contribution depending on age) on top of 401k which you can max out at 54k. We can also deduct all business expenses through the group. So in essence, a properly structured W2 set-up can give you the same tax benefits as 1099.

Not if you file as an S Corp

 

[DeadSpace]

I always heard that with 1099 you should take about 30% of the quoted pay and deduct that for taxes and benefits that won't be offered. You also have to be careful of following all the tax regulations that go along with being an independent contractor. When you're talking about making hundreds of thousands of dollars annually it makes you a big target for being audited.

 

[deleted162650]

Not if you file as an S Corp

To which part exactly are you referring?

 

[AdmiralChz]

My brother in California puts close to 150k into his self defined benefits plan (self funded) plus the regular business deductions.

U can literally drive ur 420k 1099 income down to around 100-150k easy if u wanted to. So that’s 250-300k less income exposed to both federal
And state income taxes plus less Medicare taxes (0.9% surtax above 200k and Obamacare surtaxes 3.8% on investment taxes).

I get the argument but why does one feel the need to put that much away? Med school, residency and fellowship has been brutal. I look forward to living my damn life and using the money for once.

I’m sure you know 100-150K goes next to nowhere in Urban California.

 

[nimbus]

I get the argument but why does one feel the need to put that much away? Med school, residency and fellowship has been brutal. I look forward to living my damn life and using the money for once.

I’m sure you know 100-150K goes next to nowhere in Urban California.

So you can keep it rather than throwing it away...er...pay taxes.

 

[chocomorsel]

To which part exactly are you referring?

And yet I am Yoda. What’s the difference bud?

 

[deleted162650]

And yet I am Yoda. What’s the difference bud?

Actually, Yoda would have said:

“To which part referring are you?”

Yoda speaks in a syntax that is unused by any language on Earth. Nice try though.




PS: I’m not nearly as nerdy as that just made me sound.

 

[chocomorsel]

Actually, Yoda would have said:

“To which part referring are you?”

Yoda speaks in a syntax that is unused by any language on Earth. Nice try though.




PS: I’m not nearly as nerdy as that just made me sound.

That was not the Syntax I used. I simply chose not to end my sentence with a preposition.
I know exactly how Yoda talks. I am quite a Sci Fi nerd.

 

[aneftp]

So you can keep it rather than throwing it away...er...pay taxes.

I get the argument but why does one feel the need to put that much away? Med school, residency and fellowship has been brutal. I look forward to living my damn life and using the money for once.

I’m sure you know 100-150K goes next to nowhere in Urban California.

Section 179 deductions. Luxury 6000 pound suv. Luxury cme travel. Etc. 5 star hotels. Fine dining business meals etc.

It’s not like u are living off 100-150k. That’s the after expenses income.

 

[acidbase1]

To which part exactly are you referring?

It’s impossible to capitalize on all the deductions an s Corp gives you. My effective tax rate was taken down to 20-25% vs 35-40% of W2 income. There just not much flexibility with W2’s. My accountant could probably go into more detail. And I always laugh at everyone who’s “worried about getting audited”. It’s less common than you think and if you have to pay a bit more it’s not the end of the world

 

[acidbase1]

Section 179 deductions. Luxury 6000 pound suv. Luxury cme travel. Etc. 5 star hotels. Fine dining business meals etc.

It’s not like u are living off 100-150k. That’s the after expenses income.

I took advantage of the 100% luxury vehicle writeoff the past two years. Very nice perk. And essentially everything I do is a write off

 

[caligas]

Keep in mind, that with 1099 you have to pay the employer portion of the tax also. This question really depends on the structure of the W2. My group pays W2, but we have a DBP (essentially unlimited pretax contribution depending on age) on top of 401k which you can max out at 54k. We can also deduct all business expenses through the group. So in essence, a properly structured W2 set-up can give you the same tax benefits as 1099.

Cash balance plan?

These seem great for super-savers. Not enough of them in my group to get everyone on board, too many car guys.

 

[deleted162650]

Cash balance plan?

These seem great for super-savers. Not enough of them in my group to get everyone on board, too many car guys.

Yes. Cash balance plan. Ours has a targeted return of 5%. It’s not stellar, but it’s intentionally on the conservative side. The pre-tax status more than makes up for the modest rate of return though.

 

[caligas]

Yes. Cash balance plan. Ours has a targeted return of 5%. It’s not stellar, but it’s intentionally on the conservative side. The pre-tax status more than makes up for the modest rate of return though.

Nice. I think these could also help a lot of people keep their taxable income low enough to get the full “pass through deduction.”

 

[deleted162650]

It’s impossible to capitalize on all the deductions an s Corp gives you. My effective tax rate was taken down to 20-25% vs 35-40% of W2 income. There just not much flexibility with W2’s. My accountant could probably go into more detail. And I always laugh at everyone who’s “worried about getting audited”. It’s less common than you think and if you have to pay a bit more it’s not the end of the world

So what deductions do you feel you are able to take that I am not. I’m not challenging you, I’m genuinely curious because everything that has been brought up already I can deduct through the practice: home office/internet, vehicle, travel/meals, medical, any electronics I use for work, etc.

The Hummer loophole is the one nice deduction we haven’t been able to take through the practice, but that may have changed this year. The CPA’s are looking into it. I do like the new regular depreciation limits though.

 

[acidbase1]

So what deductions do you feel you are able to take that I am not. I’m not challenging you, I’m genuinely curious because everything that has been brought up already I can deduct through the practice: home office/internet, vehicle, travel/meals, medical, any electronics I use for work, etc.

The Hummer loophole is the one nice deduction we haven’t been able to take through the practice, but that may have changed this year. The CPA’s are looking into it. I do like the new regular depreciation limits though.

First and foremost I can limit my tax liability substantially with an S Corp. Pay myself a 150k - 200k salary when I’m making 3-4x that. In addition to that, I can deduct everything you listed above and more. Also, I limit my FICA bc it’s based on my “150k salary”. Many many more detailed my accountant would have to fill you in on

And you’d be surprised what vehicles are classified at 6k pounds. Bought my wife a Porsche Cayenne which qualified as a 100% writeoff. Either live well or give it to the gov to piss away, the choice is yours

 

[deleted162650]

I can deduct everything you listed above and more.

This is the part I’m interested in. What’s the “more”??

My first gig gave us the option to be either 1099 or W2. There we also were able to deduct through the group although they weren’t as saavy and we couldn’t deduct everything I can at my current practice. I had a long sit down with my CPA at that time, and his ultimate recommendation was that going 1099 wasn’t worth it. He said he would be able to get me some very modest gains in tax savings by going 1099, but that most of it would be eaten up by increased accounting fees and payroll fees.

The reason I’m so interested in your additional mystery deductions that you won’t elaborate on is because I’d like to present these things to my group. We should be able to deduct damn near everything you are as 1099.

The point about paying yourself a reduced salary is more or less moot since I accomplish essentially the same thing by utilizing the cash balance plan.

Again, I’m not trying to argue with you here, and I’m not trying to say that W2 is better. Just trying to learn more about what exactly you’re doing to see if there’s ways to improve what I’m doing.

My effective tax rate comes in in the low 20% range also.

 

[AdmiralChz]

And you’d be surprised what vehicles are classified at 6k pounds. Bought my wife a Porsche Cayenne which qualified as a 100% writeoff. Either live well or give it to the gov to piss away, the choice is yours

While nice, I guess, these sorts of things fuel the hearts of Democrats. And i can’t say I blame them - this shouldnt be a deduction on any planet.

I’m W2, super happy, and don’t look back. Still plenty I can write off and benefits are excellent - plus will almost certainly be safe when the pendulum swings back liberal in the government over the next few years.

 

[acidbase1]

While nice, I guess, these sorts of things fuel the hearts of Democrats. And i can’t say I blame them - this shouldnt be a deduction on any planet.

I’m W2, super happy, and don’t look back. Still plenty I can write off and benefits are excellent - plus will almost certainly be safe when the pendulum swings back liberal in the government over the next few years.

These same benefits were available during Obama’s 8 years. These writeoffs are good for the economy. If you work hard and pay more taxes than 99% of the country you should be afforded such luxuries.

 

[acidbase1]

This is the part I’m interested in. What’s the “more”??

My first gig gave us the option to be either 1099 or W2. There we also were able to deduct through the group although they weren’t as saavy and we couldn’t deduct everything I can at my current practice. I had a long sit down with my CPA at that time, and his ultimate recommendation was that going 1099 wasn’t worth it. He said he would be able to get me some very modest gains in tax savings by going 1099, but that most of it would be eaten up by increased accounting fees and payroll fees.

The reason I’m so interested in your additional mystery deductions that you won’t elaborate on is because I’d like to present these things to my group. We should be able to deduct damn near everything you are as 1099.

The point about paying yourself a reduced salary is more or less moot since I accomplish essentially the same thing by utilizing the cash balance plan.

Again, I’m not trying to argue with you here, and I’m not trying to say that W2 is better. Just trying to learn more about what exactly you’re doing to see if there’s ways to improve what I’m doing.

My effective tax rate comes in in the low 20% range also.

You likely weren’t filing as an S Corp. Standard 1099 LLCs don’t differ a ton from W2s bc you get killed on FICA

 

[deleted162650]

You likely weren’t filing as an S Corp. Standard 1099 LLCs don’t differ a ton from W2s bc you get killed on FICA

No, I specifically discussed filing an S-Corp for all the reasons you’ve discussed. Still curious about your deductions.

 

[chocomorsel]

No, I specifically discussed filing an S-Corp for all the reasons you’ve discussed. Still curious about your deductions.

You ain't getting nada Salty. Give it up. He's taking his secrets to the grave.

 

[QueenJames]

These same benefits were available during Obama’s 8 years. These writeoffs are good for the economy. If you work hard and pay more taxes than 99% of the country you should be afforded such luxuries.

Goddamn libs.

Sorry.

I don't wanna die without whipping a Porsche atleast once or twice in this lifetime.

Not everybody wants to drive a prius. This ain't socialism. Eff that.

This country was built off of capitalism and the loopholes are legal. They were just waiting to be found by those dedicated and smart enough to take advantage of them.

Can you link me some solid resources to learn about tax write-offs and things of that nature.

 

[acidbase1]

No, I specifically discussed filing an S-Corp for all the reasons you’ve discussed. Still curious about your deductions.

It’s endless man. Buddies of mine live on land and purchase farm equipment. Some buy land for farming. Others rental property that has deductions. Virtually everything I do is a writeoff

 

[nimbus]

Goddamn libs.

Sorry.

I don't wanna die without whipping a Porsche atleast once or twice in this lifetime.

Not everybody wants to drive a prius. This ain't socialism. Eff that.

This country was built off of capitalism and the loopholes are legal. They were just waiting to be found by those dedicated and smart enough to take advantage of them.

Can you link me some solid resources to learn about tax write-offs and things of that nature.

Problem is Porsche is only 3000lbs. I do know a neurosurgeon though who has decals with the name of his practice all over his GT3 Cup car

 

[aneftp]

Keep in mind, that with 1099 you have to pay the employer portion of the tax also. This question really depends on the structure of the W2. My group pays W2, but we have a DBP (essentially unlimited pretax contribution depending on age) on top of 401k which you can max out at 54k. We can also deduct all business expenses through the group. So in essence, a properly structured W2 set-up can give you the same tax benefits as 1099.

Yes. A small private practice group can do that cause it requires equal distribution in retirement plans.

A large AMC....it’s not profitable to offer that to its employees cause it requires all employees to have same benefits. Would cost AMC way too much.

I’m taking a hunch the OP is comparing 440k w2 with no major tax advantages vs 420k 1099.

It’s an easy call. 420k 1099 wins hands down if that 440k w2 is Sheridan or team health or usap or whatever cause most of ur

First and foremost I can limit my tax liability substantially with an S Corp. Pay myself a 150k - 200k salary when I’m making 3-4x that. In addition to that, I can deduct everything you listed above and more. Also, I limit my FICA bc it’s based on my “150k salary”. Many many more detailed my accountant would have to fill you in on

And you’d be surprised what vehicles are classified at 6k pounds. Bought my wife a Porsche Cayenne which qualified as a 100% writeoff. Either live well or give it to the gov to piss away, the choice is yours

for the record. FICA savings end at 120-130k. So people aren’t saving any fica (social security) aspect when they pay themselves 130k w2.

You are saving yourself the 0.9% Medicare tax which has no limit. So someone making 450k w2 vs 150k (w2) is paying the equivalent of $3000 more in Medicare taxes. Plus now the 0.9% Medicare surtax after 200/250k. So u are gonna to pay $3000 plus $2000 (surtax). So $5000 more in Medicare taxes as a regular w2 making $450k compared to someone who is self employed paying themselves $150k “w2” wages

So alone is a big $5000.

And scary thing is we haven’t included the federal and state income tax savings of 30-40%. So ur real tax savings as a self employed on income over 400k really is close to $50k tax savings at min. I know when I made 450-500k self employed income. I generally paid 10-13% effective taxes on that income. But as w2. U are gonna to be paying 25%-28% roughly on that same w2 income.

So the issue is. Does the w2 job offer non taxable 50k in benefits? (Health care, employer matching etc)

 

[deleted162650]

It’s endless man. Buddies of mine live on land and purchase farm equipment. Some buy land for farming. Others rental property that has deductions. Virtually everything I do is a writeoff

Well sure dude. I could have a side hussle S-Corp like farm land etc too. I will agree that if you have a second business (whatever it may be) then it’s nice to have your primary gig 1099 too.

 

[caligas]

First and foremost I can limit my tax liability substantially with an S Corp. Pay myself a 150k - 200k salary when I’m making 3-4x that. In addition to that, I can deduct everything you listed above and more. Also, I limit my FICA bc it’s based on my “150k salary”. Many many more detailed my accountant would have to fill you in on

And you’d be surprised what vehicles are classified at 6k pounds. Bought my wife a Porsche Cayenne which qualified as a 100% writeoff. Either live well or give it to the gov to piss away, the choice is yours

The 100% write off on your wife’s Porsche, ballsy.

 

[deleted162650]

The 100% write off on your wife’s Porsche, ballsy.

Yeah, it’s hard to justify 100% business use, but . . . Don’t ask, don’t tell.

 

[acidbase1]

The 100% write off on your wife’s Porsche, ballsy.

No it’s really not. Why you’re an anesthesiologist and not an accountant

 

[acidbase1]

Well sure dude. I could have a side hussle S-Corp like farm land etc too. I will agree that if you have a second business (whatever it may be) then it’s nice to have your primary gig 1099 too.

They deduct it from their medicine revenue

 

[AdmiralChz]

Yeah, it’s hard to justify 100% business use, but . . . Don’t ask, don’t tell.

Yeah, when my neurosurgeon neighbor separated from his 2nd wife “an anonymous informant” informed the state and IRS of stuff like this... dude’s sort of a prick though.

Different strokes - I’m more risk averse than others on this forum so I wouldn’t be deducting a such a car on my wife anyway.

 

[deleted162650]

They deduct it from their medicine revenue

That’s irrelevant. A deduction is a deduction. You can deduct all business expenses from your side business regardless. If the side business operates at a loss that’s even better as long as you structure it so it’s not a loss too many years in a row.

 

[acidbase1]

Yeah, when my neurosurgeon neighbor separated from his 2nd wife “an anonymous informant” informed the state and IRS of stuff like this... dude’s sort of a prick though.

Different strokes - I’m more risk averse than others on this forum so I wouldn’t be deducting a such a car on my wife anyway.

You’re pretty lame

 

[acidbase1]

That’s irrelevant. A deduction is a deduction. You can deduct all business expenses from your side business regardless. If the side business operates at a loss that’s even better as long as you structure it so it’s not a loss too many years in a row.

That’s what I meant, was making sure you understood what I meant when you started talking about multiple 1099s

 

[AdmiralChz]

You’re pretty lame

Definitely a possibility, my 6 month old alternates between laughing and screaming at my face.

The deductions I get - not unusual! But you’re a little more risk-taking (or to be more positive, entrepreneurial) than most. I mean, you took a medical director collaborative-ish position supervising CRNAs straight out of training while also doing afternoon chronic pain procedures seemingly without a fellowship. I hope you aren’t supervising/collaborating during that time...

Any one of these I can see, but together it seems like a lot and could attract the wrong kind of attention. More power to you for making it work, but I’m not sure there’s a number/salary I’d take on that much liability, personally.

 

[narcotics999]

First and foremost I can limit my tax liability substantially with an S Corp. Pay myself a 150k - 200k salary when I’m making 3-4x that. In addition to that, I can deduct everything you listed above and more. Also, I limit my FICA bc it’s based on my “150k salary”. Many many more detailed my accountant would have to fill you in on

And you’d be surprised what vehicles are classified at 6k pounds. Bought my wife a Porsche Cayenne which qualified as a 100% writeoff. Either live well or give it to the gov to piss away, the choice is yours

Your accountant's phone number please?

 

[acidbase1]

Definitely a possibility, my 6 month old alternates between laughing and screaming at my face.

The deductions I get - not unusual! But you’re a little more risk-taking (or to be more positive, entrepreneurial) than most. I mean, you took a medical director collaborative-ish position supervising CRNAs straight out of training while also doing afternoon chronic pain procedures seemingly without a fellowship. I hope you aren’t supervising/collaborating during that time...

Any one of these I can see, but together it seems like a lot and could attract the wrong kind of attention. More power to you for making it work, but I’m not sure there’s a number/salary I’d take on that much liability, personally.

I assume no more liability than you. And your understanding of my situation is somewhat misled. But you are correct, it’s a lot of work. I plan to invest well and take a more “traditional” job like everyone else some day.

And to my defense with the auto writeoff, my wife is the practice manager. She works her ass off. Therefore, I don’t find it to be a stretch.

 

[caligas]

Your accountant's phone number please?

Just call the operator at Leavenworth.

 

[aneftp]

Have you guys seen how other business people write off expenses. They are just as bad or worse.

But guess what? It’s all legal if you can document. If u have dinner with a colleague. Even remotely discussing one health related thing. That’s legal meals deduction.

 

[nimbus]

Have you guys seen how other business people write off expenses. They are just as bad or worse.

But guess what? It’s all legal if you can document. If u have dinner with a colleague. Even remotely discussing one health related thing. That’s legal meals deduction.

True. My parents were small business owners. They never bought a restaurant meal or a car or a single gallon of gas with post tax money.

 

[d9sccr]

Anybody have links/info about how to do these write-offs?