Not sure if this is the best subreddit to ask so feel free to direct me to a different sub if appropriate.
I worked as a public employee and I had a real bad workplace accident which forced me to retire and now I collect my disability pension benefits. To supplement my pension income, I started a consulting business under a Single Member LLC.
The rules of my pension are that if I make more than what my former position’s base salary, it’s deducted from my pension benefits. For example (not real figures), if the salary of my former job was $100k/yr and my current pension is $50k, I’m only allowed to make an additional $50k. If I make more than an additional $50k, then my pension benefits will be adjusted so that I’ll only make $100k. If I earn more than $100k/yr , then I’ll forfeit all pension benefits. This restriction expires on my 50th birthday which was the pension plan’s earliest retirement age.
I didn’t anticipate making this much money and I really don’t want to “work for free” so I’ll admit it’s a good problem to have.
Can I pay myself as a W-2 employee and file my company’s taxes as an S-Corp? If I file my LLC’s taxes as an S Corp, will the LLC still show on my personal income like it did when I filed as a sole proprietor?
That way I can control my personal income and just invest the rest of the companies profits until I turn 50 which is about 15 years away.
Thanks!
Def get with an attorney and a CPA on this. For example, you could potentially set up a legal structure like this and pay yourself a salary from the business entity. Any excess profits of the business could be held for future business plans and invested in the stock market til such a time. You could also likely set up a retirement plan that you can contribute to out of that salary and also have the business provide a healthy employer match. All these things could potentially lower your taxable income while preserving your equity in your business.
Just be careful here as you don’t want to be committing any sort of disability fraud (not accusing you) but just make sure you spend the $ to talk to real credentialed tax attorney and CPA.
Definitely not trying to commit fraud! The worst that can happen is my allowance is deducted because I document all my income 1099
And that’s really solid advice! thank you!
Make sure you dont let too much $$ accumulate in your operating company. You can set up a holding company or trust to pay out dividends to and invest that money there.