part time or IC

[Thorg12]

hey guys

contemplating doing some part time work. Im in EM and would do about 1 shift per month. the recruiter said it would be part time but could discuss IC if I want. It only at one site for pretty good rate; no required min or max shifts. Should I bother asking for to a IC? is it really worth it if its only small amount of shifts?

I know similar questions have been asked and if you can point me in right direction I would appreciate it

FYI my full time job, I am employee get 50k into profit sharing account for retirement. I know being an IC may open some more tax sheltered space

thanks

[jfoxcpacfp]

Thorg12 wrote:

contemplating doing some part time work. Im in EM and would do about 1 shift per month. the recruiter said it would be part time but could discuss IC if I want. It only at one site for pretty good rate; no required min or max shifts. Should I bother asking for to a IC? is it really worth it if its only small amount of shifts?

I know similar questions have been asked and if you can point me in right direction I would appreciate it

FYI my full time job, I am employee get 50k into profit sharing account for retirement. I know being an IC may open some more tax sheltered space

Click to expand...

Yes, I recommend you ask for IC for a number of reasons. PMD recently carried an article I wrote about this topic.

[Thorg12]

Thanks so much. Super helpful as usual!

[G]

Thanks, Johanna, I just bookmarked that page, worth remembering and using for reference for me and others.  At some point, I need to sit down and run the numbers of setting up separate corps.  Like Thorg, I am in a position to make some income on the side with contracting, but I am not sure it is worth it (as opposed to just working more at my main gig).  Also, I make a little side income from non-patient care; right now I just report that as income on my 1040, but I suppose I could formalize a business and put that money into it--hence summing cost of incorp, business license, taxes compared to small amount of income.

[jfoxcpacfp]

G wrote:

Thanks, Johanna, I just bookmarked that page, worth remembering and using for reference for me and others.  At some point, I need to sit down and run the numbers of setting up separate corps.  Like Thorg, I am in a position to make some income on the side with contracting, but I am not sure it is worth it (as opposed to just working more at my main gig).  Also, I make a little side income from non-patient care; right now I just report that as income on my 1040, but I suppose I could formalize a business and put that money into it–hence summing cost of incorp, business license, taxes compared to small amount of income.

Click to expand...

Glad it helped. If you have relatively little income on the side ($50k or less), the costs of administration for a corporation will probably outweigh any $$ you could save in distributions. Most likely, a SMPLLC w/b better (unless you are in CA).

[spiritrider]

You should resist the conventional "wisdom" of setting up an S-Corp. Contrary to that wisdom, it is counter productive to do so with "moonlighting" income.

One primary reason people use for setting up an S-Corp is that you can pay yourself a lower income and only have to pay FICA in that lower income. This has become challenging with several court cases and the IRS focusing on unreasonable low income.

However, there is an unintended consequence. When you reach the Social Security maximum wage base (2016 = $118,500, 2017 = $127,200), you no longer pay the SS component of FICA. As a W-2 employee this stops being deducted. If you are self-employed and your primary W-2 box 3 >= SS max, then your SE tax is not subject to the 12.4% SS component. However, all employers (including an S-Corp) must deduct the full FICA up to the SS max. This is true regardless if you have already reached the max at another employer. Now while you can recover the employee share at tax filing time, the employer portion is not recoverable.

You will save 2.9% on S-Corp distributions, but you will pay an extra 6.2% on any W-2 wages. Not a good trade off. Also, employer retirement plan contributions will be based on those W-2 wages, where the self-employed will be based on total compensation. So you will end up paying higher FICA with an S-Corp than the SE taxes you will pay as a sole proprietorship.

Finally, if you do find yourself able to hire any children in the business, you don't have to pay FICA and FUTA, but only if your business is a sole proprietorship.