Since the damned California AB5 has taken effect, which basically banned 1099 employment forcing you to work as an employee at companies, I have already lost the ability to write off employee expenses, which I previously was able to do with a schedule C (I know it is the worst for getting audited, but it let me write off expenses at least), but what I hadn’t realize is how much it screws up retirement plans.
Yes I knew about ROTH and regular IRA contributions, which max out at $6000, but as a 1099 employee in addition you can do either a Individual 401(k) with contributions up to $19500, or $26000 if over 50 or a SEP IRA which lets you d0 25% of eligible compensation or 20% of Net earnings or $58,000! And that is in addition to the IRA.
The only other solution is do an S Corp if the companies will even hire me that way and incur the $800 fee, but all the additional tax filing fees and accountant fees to have a corporation that has to pay me, and my accountant says it isn’t worth it unless I am making over 100,000 a year.
And with COVID-19 I now literally work full time on my home machine and equipment, and have to keep all software and hardware up to do, but not being able to file a schedule C means that I can’t write any of that off, and I can’t do additional retirement plans being a traditional IRA or ROTH IRA? Seriously?
Does AB5 actually help anyone?
