I'm not sure how you guys want content collected here.
Thanks everyone for the awesome discussion so far, please keep it coming!
If anyone has suggestions on how to summarize, let me know. In the meantime, I'll go through the thread and try to link back from the first post to any questions that have been answer/discussed, and add new questions and discussion items as they come up.
Miscellaneous Income: If you're doing something business-y or that requires your effort for the income, you should report on Schedule C and if over $400 on Schedule SE. Yes, this means you pay SE tax. This also means you can use the earnings to fund a pension.
Follow up questions to that point:
If you are over the SS max (~$120k) would there be any reason not to file as self employment income, perhaps except more complex taxes?
If you have multiple sources of misc 1099 income, some business-y and some more miscellaneous-y, can you pool them all for the purposes of filing and funding a pension?
SEP Plan Creation Deadline: You can set up a SEP and make the contribution right up until the tax return deadline. If you extend, you can use the extended return deadline. Note that other options, like a Simple-IRA, have earlier deadlines.
So for someone who has side hustle business income from the previous year and didn't think about sheltering the taxes earlier, it sounds like a SEP would be the only choice after the year ended, but before the tax filing deadline. With the caveat that you should consider the implications if you also performed a backdoor Roth:
Despite that, the solo 401k could still be a better option because, 1) unlike a SEP, it would not interfere with a backdoor roth
Given that, before the filing deadline, could you first set up a SEP to accept as much 2016 income as allowed, and also set up a solo 401k based on anticipated 2017 income, then perform a rollover relatively immediately from the SEP to the solo 401k in order to avoid interfering with the backdoor roth?
The ObliviousInvestor post linked is a great resource. Thanks for sharing.
I thought so too, will add to the top
We are talking about strictly a side hustle here right? I formed an S-corp for my main job because a customer wanted to do business with another corporation. Otherwise, its a bit of work and I don't know that I would recommend it.
This is something worth considering from a non taxes point of view. I've run into this in the past before as well, where a consulting firm would only enter into a 1099 relationship with me if I was corporation; otherwise it had to be a W2 relationship. I don't know how you would figure out if it's worth the complexity for the chance that this might happen.