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Importance of 1099 income

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  • Importance of 1099 income

    I recently switched from FT with one position to PT with PRN shifts on the side. One PRN site pays docs as W2 employees. The other provides 1099 income. I opened a solo 401k to enable additional pretax retirement contributions from my 1099 income. After factoring in hidden costs (charge for scribes, uncompensated overtime, additional taxes, etc) and a raise at my primary site, the 1099 now pays the lowest and is not ideal for other reasons. How advantageous is it to find another source of 1099 income vs just working additional hours at the site that pays the best--one W2 site pays $25/hour more than the 1099 site)? Is it worth it to have 1099 income just to have the perks of 1099 income (with tax credits, retirement options) vs maximizing pay per unit of time?

  • #2


    nother source of 1099 income vs just working additional hours at the site
    Click to expand...


    Not having to "find a new job" has some perks. Unless you need to do so! You could add some complexity to life, find a different 1099 gig, work more, and put some more in retirement. Hard to find that balance.

    To make the decision, I'd make a spreadsheet, and determine how much you'd save for retirement in 1099 vs staying put and just earning more (and fill a taxable account?). Then I'd go with my (now better informed) gut feel.

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    • #3
      There should not be uncompensated overtime for 1099 income - I'm a little confused by that statement. 1099 should mean that you control the hours you are paid for.

      The reason many physicians have a side hustle is to qualify to set up a SOLO-k so they can roll pre-tax IRAs into it. This allows them to take advantage of nontaxable backdoor Roth IRA space they were previously denied. In your situation, if the cost outweighs the benefits and you have other, better options, there is no reason to continue the 1099 job, at least based on the facts presented.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4


        I opened a solo 401k to enable additional pretax retirement contributions from my 1099 income.
        Click to expand...


        Keep in mind that the $18,000 pre-tax employee contribution is aggregate, not per plan. You're probably aware of that, but wanted to make sure, so you don't run afoul of the IRS.

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        • #5
          Confirms what I had been thinking....to simplify and ditch the 1099 option. Thanks for your comments.

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