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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3159
Experience:  I've prepared all types of taxes since 1987.
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I am retiring at the end of this month. I will be doing some

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I am retiring at the end of this month. I will be doing some "consulting" for the same company that I have been working for, but not as an employee so that it will not effect my pension. I need some advice regarding how to proceed. I do not expect this to last more than 6 months to a year.
Do I have to establish a business or is there another way for this to be accomplished. I do not want to avoid paying the taxes involved. I just cannot let it interfere with my pension.
I have heard about independent contracting, but again I need advice regarding a path.
Submitted: 6 years ago.
Category: Tax
Expert:  jgordosea replied 6 years ago.

Greetings,

 

You can do consulting and not form an entity for the business.

See Who Is Considered Self-Employed? - IRS.gov

 

As a sole proprietor you will file Schedule C (Form 1040), Profit or Loss from Business or Schedule C-EZ (Form 1040), Net Profit from Business to include the net income from consulting in your income subject to income tax.

 

And you will file Schedule SE (Form 1040), for your Self-Employment Tax if you have more than $400 net income from the activity.

 

Since you will not have any tax withheld from the payments to you as a contractor, you may need to file 1040-ES, Estimated Tax for Individuals if the withholding on your pension is not enough to cover your tax due for the year. For more details see Estimated Taxes

 

Please ask if you need clarification.

 

 

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