Might take a part-time 1099 position

I was offered today to do part-time work for a company I previously worked for as a full-time employee. It is rather simple linux administration work for a set of Linux servers I built myself. Apparently the full-time person they hired after me didn't work out and the government entity wanted me back. I currently have a full-time position I love so I wouldn't want to go back. They are willing to pay me on a 1099 and are aware of my full time position. It seems like easy money to me. I just don't know how to proceed on the 1099 side, like sole vs llc, using some software to manage my taxes and what tax benefits or write-offs can I use to minimize my taxes next year ( I had the luxury of paying taxes this year - no fun). My current job and this one would both be remote with no travel.

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Comments

joelsfood

Put aside 33% in interest bearing account/investment of your choice, pay taxes at year end. If it's enough to be worth the hassle and cost of an LLC, go ahead with that, but it can complicate tax preparation and does cost some money. Technically you should pay taxes quarterly, but even at 50k/yr, the late payment penalty is only $200 or something, and you can find a place to put that money that'll earn more than that.

iBrokeIT

Quickbooks Self Employed
SEP IRA
1040-ES - As a 1099 you will need to make quarterly estimated tax payments to the IRS
I would look into forming an S Corp

Mitechniq

I was thinking of using quickbooks
For the simplicity maybe doing a sole proprietorship and if things build from there I would transfer it to an LLC.
I have a domain name and I am taking my DBA form to the county clerk tomorrow. After that I will apply for an EIN from the IRS.
I like the idea of investing the money and paying taxes at the end of the year, I didn't think about that.

Danielm7

Use the term "investing" very carefully! That's super short term, anything other than a high interest savings account is a total gamble on tax money in less than 1 year.

Dojiscalper

My wife's done 1099 work. Make sure you talk to an accountant from your area real quick before you do it. You might be surprised how little you end up taking home so be informed. Also if you did form an entity it would be an LLC in most cases however its not necessary, you can let an accountant take care of it either way.

And don't invest what your going to owe the IRS, at the most put in a CD, but really its not worth it unless its a large amount, just keep in a savings account and stay out of it.

Mitechniq

So it looks like things are going to go through, the government accepted the position as part-time. Not quite sure I negotiated the pay aggressively enough but for standard linux admin work I think 51 an hour is fine. Again I have a full time job and most of this money will be going into savings or paying my mortgage down.

What do you guys/gals normally write-off on Taxes? I read that I can write-off certification training and exam fees which are related to the work I will be doing.

joelsfood

All depends on your particular details, so make sure to consult an accountant, as mentinoed
Certification tests,t ravel (when I go on-site for work), training material, home office, software expenses (things like Teamviewer), etc. Basically, whatever Turbotax says I can write off.

pramin

Mitechniq wrote: »

So it looks like things are going to go through, the government accepted the position as part-time. Not quite sure I negotiated the pay aggressively enough but for standard linux admin work I think 51 an hour is fine. Again I have a full time job and most of this money will be going into savings or paying my mortgage down.

What do you guys/gals normally write-off on Taxes? I read that I can write-off certification training and exam fees which are related to the work I will be doing.

If this is short term; ie less than a year then do 1099 to yourself.

If it is long term; ie longer than a year you can set up company and do 1099 to company. Have company pay W2 wages to yourself. Setup a Solo401K to shelter all part time income. Depending on your full time job retirement benefits you can shelter up to 53K under the Solo401K.

You can "google" customary business expenses that can be written off.

Good luck to you.