Ways maximize tax benefit as 1099 worker

[Willamette2024]

This year I will be switching to a 1099 worker (sole proprietor) working 3 days/week for a major airlines as a senior brand manager instead of as a fulltime W2 employee (last year).

One of those 3 days I will have to travel by mu car 40 miles to the corporate office for weekly group meetings.

Nature of my job is business mass media/graphic design service, therefore I can say it has no personal liability of potentially being sued. I do not have to purchase any insurance to protect my business services.

My projected annual 1099 income this year is $120,000. here will be no other income.

Business expenses will be the typical "home office" in the house basement (assume that is based on sq. footage, estimates 500 sq. ft., utilities for the space), auto travel expenses to/fro home - corporate office.

My goal is to find the best option to maximize my tax benefits as a 1099 worker. 

Should it be:

1099 Sole Proprietor

1099 LLC

1099 LLC but taxed as S Corp

S Corp

[AmyC]

An LLC is just a legal entity, it is not a tax entity. Once you establish that you are an LLC, if you file no other paperwork, you are a sole proprietor by default.

As a start up, it is cheaper and easier to be just the LLC sole proprietor until you decide if you want to switch over to S Corp. Refer to Business structures by the IRS. It offers the pros and cons along with which benefits are available. The S- Corp requires more paperwork and you must issue yourself a w2.

No matter what option you choose:

• You will have to pay the Self-employment tax
• You need to set up and make contributions to your Retirement plan. Depending on how much you want to set aside, that may affect your choice of business structure.
• You will have to purchase your health insurance. See Small Business Health Care Tax Credit and the SHOP Marketplace 
• You need to make quarterly Estimated taxes that include your income tax plus your self-employment tax.

Reference:

Self-employed individuals tax center