[USER]

My husband makes around 550k and we are in the 35% tax bracket. We live in Ohio so also pay state taxes as well
I have a friend that wants me to come work for her while she is starting her small business.

She wants to hire me as a 1099. Is there a rough estimate on how much I would pay in taxes? I would assume around 40%?

I would be doing half the work from her house and half from my house?

Can I write off my office at home even if it’s only like 10 hours a week? If she is paying me as a 1099, can I pay my kids from that?

Some of the stuff I bring home if stuff they would do ( writing thank you cards, packing up the product etc).

Could I pay them and reduce my income that way?

I want to help her but paying 40% I taxes makes it not worth my time unless I can somehow write things off

[Shawn]

A 1099 is a business. You don’t need an LLC, you can but it’s not required.

You can deduct a home office but the space must be used exclusively for business, it doesn’t need to be a whole room.

You can pay your kids provided they do actual work, you can document it, you actually pay them, and the amounts are reasonable for the jobs performed.

Also look into a Solo 401k.

[Kavitha]

You can file married filing jointly which will save you a lot as the tax bracket is favorable to MFJ.

[Kim]

It sounds like your friend should be doing a W2 for you as an employee not a 1099 as an independent contractor… but without knowing more couldn’t say…

I would discuss that further with her first.

[Rebecca]

Make sure the position even qualifies to be paid as an independent contractor.

The IRS defines that and employers have to structure their work appropriately to qualify.

[Niecy]

You are age and amount limited with your kids doing work. You will need to look into starting a business to do your write offs.

Depending on what she pays it will affect wig you are LLC, Inc, S corp etc.

Talk to your CPA to determine what the salary range is. Your husband makes half a mil – you have a CPA.

People on here don’t know enough about your finances to give you solid info.

[Elizabeth]

If your marginal tax rate is already at 35%, then all of your income would be on top of that taxed at 35% plus self-employment tax of 15.3% for a total of around 50%.

It’s a little more complicated than that since half of the self-employment taxes count as an adjustment to income, but that is the easiest explanation.

Ohio does not tax the first $250k of self-employment income if Married Filing Jointly, so there shouldn’t be any state taxes if below that.

[Erica]

So, I’m not you by any means but in my marriage my husband rounds up on his withholdings and I get my money like cash.

Yes, there is taxes and yes, we do everything to lessen our tax burden, but me getting taxed for my small little fun activity which sounds similar to yours it might just make everything more worthwhile.

I did set up an LLC and deduct my phone, computer, mileage, partial home internet, postage, office supplies.

[Matheny]

federal income tax, which could be up to 35%, depending on how much you earn and your household AGI, your effective tax could approach or exceed 40%.

But here’s where deductions can help.

You helping her could be a great move but only if it fits into your big picture.

With the right tax planning, you can make it worthwhile and even channel that income into Roth contributions or dividend investments for long-term wealth.

[Nguyen]

here are 3 questions you’d need to to answer for us better answer your question

1. How much do you expect to earn annually from the 1099 work?
2. Are you filing jointly with your husband?
3. Would this be considered self-employment income (e.g., freelance or contractor)? Or LLC

[Jeremy]

If that’s the only place you’re going to work you need to be W2 or set up your own business for her to pay as a bill.

The IRS will not like you doing 1099 to reduce taxes, but as a biz you could deduct phone, mileage, etc and pay a lot less in payroll tax.

[Jenny]

I grow cut flowers to sell as a side hustle and deduct a percent of my rent for the seedlings/cuttings that take over half my house all winter, % of water bill to water, % of electric for grow lights/fans/refrigeration of tubers.

But the thing is I was going to grow cut flowers anyway because I like them, but selling them makes it a business.

Uncle Sam wants his cut, I want my fair deductions.

We do have a tax accountant do our taxes so it’s all done correctly and we are high earners.

[Author]

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