Snag75ParticipantStatus: PhysicianPosts: 179Joined: 12/09/2018
I have some IC income which is a fraction of my W2 income, but last year I ended up claiming a HO and other business expenses which created quite a (relatively) large deduction.
This year I won’t be able to deduct job expense for my W2 income (boo!) and will lose out on my high CA state and property tax deductions, so I thought, well at least I can deduct from my business, right?
But this year I also wanted to open a solo-K and contribute to that (I’m behind on retirement contributions) and if I deduct too much business expenses, that means less I can contribute, right? Also less for pass-thru deduction?
Does it ever make sense to NOT take business deductions that I could technically qualify for? Meaning, is my business income worth more as a 20% deduction (and 100% retirement contribution) than what the deductions might be worth? What kind of numbers are we considering here (if it makes a difference, I plan to keep the money invested for 20yrs more)?
Besides HO, there is internet and cell phone, as well as routine physician costs (licensing, CME, etc) which I guess I can’t deduct for W2 purposes now. I’m also wondering that, if I can’t deduct those as job expenses for W2 physician income, can they be deducted (at 100%) for my 1099 income, or still only a fraction?
Also fyi I do have the TT desktop software, so I could do all the calculations for all business expenses and see what happens to overall refund, but 1. I’d rather not calculate if I know the bottom line is that it’s better to max my investment or whatever, and 2. I want to know what is the “correct” answers are besides the tax consequences to me.
Appreciate any input!February 8, 2019 at 1:15 pm MST #189330jfoxcpacfpModeratorStatus: Financial Advisor, Accountant, Small Business OwnerPosts: 7117Joined: 01/09/2016
To avoid taking business deductions for the purpose of artificially raising your contribution limit could be considered fraudulent. We had a convo about that here sometime in the last couple of years but it would take me forever to track it down. I do remember that @spiritrider had a very well-worded opinion.
Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
https://fox-cpas.com/for-doctors-only/February 8, 2019 at 1:26 pm MST #189332jacoavluModeratorStatus: Physician, Small Business OwnerPosts: 1695Joined: 03/01/2018
We had a convo about that here sometime in the last couple of years but it would take me forever to track it down. I do remember that @spiritrider had a very well-worded opinion.Click to expand…
I do recall this as well but don’t recall the original thread
@snag75 I think we already answered this same question for you
The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA