W2 vs 1099 income

[deleted162650]

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

Talk to your CPA. If your gonna start to get fancy, you really should have one.

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[USCTrojan11]

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

How did you qualify a 5000 lb car as > 6000 lbs? Very curious

NVM - for those curious, its based on GVWR and the Porsche is 6200 lbs

 

[caligas]

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

 

[d9sccr]

Talk to your CPA. If your gonna start to get fancy, you really should have one.

I don't disagree with this at all, but I also think it's a wise decision to self-educate yourself a bit and not just blindly follow a CPA.

I'm done with residency soon (<30 days, yay!) and plan on using the CPA used by most of the group I'm joining. I'd just like to be better informed and haven't found great sources about deductions as a 1099

 

[timgasman]

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?

A thousand times over take the 1099. W2 is taxes very heavily especially if you live in a high tax state and/or your W2 is above $200K. 1099 is the way to go.

 

[deleted162650]

I don't disagree with this at all, but I also think it's a wise decision to self-educate yourself a bit and not just blindly follow a CPA.

I'm done with residency soon (<30 days, yay!) and plan on using the CPA used by most of the group I'm joining. I'd just like to be better informed and haven't found great sources about deductions as a 1099

Talking with the CPA should be your starting point, especially if they are handling a lot of the group already. Take what they tell you, and do your research from there. The real value of a CPA is not in filing returns, but the tax planning strategy they offer you.

 

[caligas]

A thousand times over take the 1099. W2 is taxes very heavily especially if you live in a high tax state and/or your W2 is above $200K. 1099 is the way to go.

Link below is helpful in making the decision/calculation. (I stand by my opinion that the W2 with a higher income that doesn’t even include benefits is going to beat the lower 1099 with no benefits. I mean, you still owe the taxes even if they are not automatically taken out like they are with w2.)

W2 vs Self-employed | The White Coat Investor - Investing And Personal Finance for Doctors

 

[nimbus]

One advantage of a W2 with a 401k+cash balance plan is that one can sock away a lot of CASH. No need to buy a farm, farm equipment, or a big SUV that you don’t need or want.

 

[deleted162650]

One advantage of a W2 with a 401k+cash balance plan is that one can sock away a lot of CASH. No need to buy a farm, farm equipment, or a big SUV that you don’t need or want.

The other nice benefit is that it keeps your personal return extremely simple and clean with very low risk of an audit.

An audit, even if you pass with flying colors, is a uuuuuuge pain in the ass.

 

[deleted162650]

No need to buy a farm, farm equipment, or a big SUV that you don’t need or want.

But there’s nothing like spending a dollar to save 40 cents right?

 

[midazzoler]

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

Maybe I'm unlucky but I got audited the year I finished residency and started my "real" job. (Also had to "verify" my identity to the IRS the year after that.) No red flags. IRS wasn't looking for anything nor did they find anything. Both the IRS and my accountant said it was "random" but other accountants and retired IRS agents I've talked to say there is no such thing as a "random" audit. Moral of the story, audits happen. Be ready with documentation or be ready to pay up.

 

[acidbase1]

Maybe I'm unlucky but I got audited the year I finished residency and started my "real" job. (Also had to "verify" my identity to the IRS the year after that.) No red flags. IRS wasn't looking for anything nor did they find anything. Both the IRS and my accountant said it was "random" but other accountants and retired IRS agents I've talked to say there is no such thing as a "random" audit. Moral of the story, audits happen. Be ready with documentation or be ready to pay up.

Congratulations, you won the audit lottery

 

[midazzoler]

Congratulations, you won the audit lottery

I wouldn't say I won but hopefully they leave me alone for a while. I take satisfaction in knowing they spent more to conduct the audit than they got out of it. Then I get angry when I think that my taxes prop up the IRS so that they can waste my time and theirs.

 

[acidbase1]

 

[Swamp Gas]

When you go to a conference/vacation, do you try to get any documentation other than a receipt for the conference? Do you need proof that you attended the conference for every day of your hotel stay?

 

[caligas]

When you go to a conference/vacation, do you try to get any documentation other than a receipt for the conference? Do you need proof that you attended the conference for every day of your hotel stay?

From an IRS standpoint you need proof that you spent the money.

 

[Doctor_anonymous]

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

Have you considered the pros/cons of a C Corp vs S Corp for your pay? If so can you share why you chose S Corp?

I’m about to begin my specialty residency and looking to minimize taxes when I get out.

Thanks.

 

[BLADEMDA]

Have you considered the pros/cons of a C Corp vs S Corp for your pay? If so can you share why you chose S Corp?

I’m about to begin my specialty residency and looking to minimize taxes when I get out.

Thanks.

S Corp is excellent for young graduates. You NEVER want a C corp as a 1-2 person group. You either go with an LLC/Sole Proprietorship or S corp. Older providers should choose the former while younger providers can pick either one with an S corp being a fine decision.