can 1099 income be used for SEP-IRA or individual 401k?

[notmakingmoney]

Hi,

My wife and I have have small side jobs that generate 1099 income. Can the 1099 income be used to fund a sep ira and/or an individual 401k? The 'business' is not formally incorporated though.

Thanks!

[Flobes]

The answer is maybe your 1099 income can be used to fund retirement accounts.

How are you reporting this income on your taxes? Are you filing Schedule C for each side business? Are you paying Self Employment Tax?

Do you have W2 jobs? Are you funding other retirement accounts through other work and/or through personal tIRAs or Roth?

How much is "small" 1099 income? (to evaluate i401k vs SEP vs SIMPLE)

[notmakingmoney]

The answer is maybe your 1099 income can be used to fund retirement accounts.

How are you reporting this income on your taxes? Are you filing Schedule C for each side business? Are you paying Self Employment Tax?

Yes, we file Schedule C and pay self-employment tax.

Do you have W2 jobs? Are you funding other retirement accounts through other work and/or through personal tIRAs or Roth?

Yes, we both have W2 jobs, funding 401k through payroll deductions and also Roth IRAs.

How much is "small" 1099 income? (to evaluate i401k vs SEP vs SIMPLE)

The 1099 income is a couple of thousand dollars max.

[vnatale]

Start here and read this. Mike Piper is a member of this forum and his information / advice is always impeccable.

https://obliviousinvestor.com/sep-vs-si ... solo-401k/

[JBTX]

Yes it can. The amount you can contribute will be based on schedule C net income, including a share self employment taxes, and the amount you can contribute is subject to limits if you are also contributing to a 401k.