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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2313
Experience:  IRS licensed Enrolled Agent and tax instructor
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2015 mixed income. W-2, 1099 and SS. What is best plan

Customer Question

2015 mixed income. W-2, 1099 and SS. What is best plan for highest deferred taxes?
Submitted: 11 months ago.
Category: Tax
Expert:  emc011075 replied 11 months ago.

HI. My name is ***** ***** I will be happy to help you.

You have couple of options. If your employer offer 401K or other retirement plan, you can contribute to it in addition to your IRA. What type of 1099 do you have? 1099Misc? In which box is the income reported?

Expert:  emc011075 replied 11 months ago.

Sorry, I realized you are talking about 2015 so you don't have 1099 yet. Are you self-employed or independent contractor? Or where is the 1099 from?

Customer: replied 11 months ago.
W-2 income was $5,834. SS is $9,302. 1099 income $50,367. No employer retirement. Question about 1099 not sure. My LLC which can be disregarded. Had one contract. Not sure which line that shows up as on 1099. There will be about $3,000 investment loss on long term investment.Thought SEP IRA would allow $24,000 deduction ($18,000 + $6,000 catch up Age 66) and can be set up on line but my recent research has me confused. If I have to set up a 401-K for myself it must be done before year end.
Expert:  emc011075 replied 11 months ago.

Ok. It looks like it will be 1099Misc with box 7, which will be reported on Schedule C along with your other expenses. As long as you have enough earned income, which it looks like you have, you can max up your IRA (6,500 for 2015) and you can also research some retirement plans for self-employed individuals. The best place to start would be with your IRA administrator. Organizations that offer IRA usually offer sole 401K or other retirement plans for self-employed individual.

Expert:  emc011075 replied 11 months ago.

Here are some options: https://www.irs.gov/Retirement-Plans/Retirement-Plans-for-Self-Employed-People

And here are the plans in more details: http://www.forbes.com/sites/kerryhannon/2011/04/01/the-best-retirement-plans-for-the-self-employed/3/

Expert:  emc011075 replied 11 months ago.

You will also be able deduct your Medicare and other medical insurance premiums directly as above the line deduction, which means you do not have to itemize your deduction and it the deduction is not limited by your AGI. This will also reduce your taxable income.

Expert:  emc011075 replied 11 months ago.

Any questions?

Customer: replied 11 months ago.
I was looking for specific advise. I appreciate this but I have been to those very links. I am most confused about IRA vs 401-K. If I have to go to a local adviser the fees start to build so I wanted to do this on my own. I'll go to my bank first and see what they offer.
Customer: replied 11 months ago.
Thanks about the medicare deduction. I am pretty savvy about most of this stuff. I am just confused about plan set ups. Looks like SEP IRA will be my best option which I can do up until filing date but if 401-K is best I must file before week end.
Expert:  emc011075 replied 11 months ago.

You can have both, IRA and 401K. Who is administering your IRA? Many plans can be opened online without having to pay fees to your advisor.

Expert:  emc011075 replied 11 months ago.

Even banks and Credit unions have tons of information online and option to do it yourself. You may have to fax or mail some signature authorizations, but if you already have an account with the financial institution, it should be relatively easy. I opened my IRA and Solo 401K with Vanguard without online without having to talk to any financial adviser. The key is to know what you want.

Customer: replied 11 months ago.
E Trade is administrator but they only offer plans that go into stock purchase accounts. I've managed to lose all my contributions to date so I need a bank or some entity to just let the money sit. I will go to my local bank and see what they offer. The 401-K plans all seem to require fees for administrators and such. I just want the most money deferred this tax year to 2016. I am mostly retired and won't have much income next year.
Expert:  emc011075 replied 11 months ago.

I understand. In few years you will be required to take minimum distributions so it doesn't make much sense to pay large fees to administer your retirement account.

Customer: replied 11 months ago.
I thought I had to rate the service before the charges were fully authorized. The full $38 has been charged to my credit card. I delayed rating your service because, although you spent time and was earnest I really didn't end up with more information than I already knew. I realized this was the wrong forum for my question so was torn about paying for very general information but didn't want to rate you low to avoid charges. Advice just wasn't worth much at all but I realize that had nothing to do with your expertise or lack thereof.
Expert:  emc011075 replied 11 months ago.

The charge on your credit card is a deposit. I don't have access to billing and I don't get paid for helping you until you rate the answer. Let me notify Just answer customer service, somebody will contact you.