I’m currently salaried (corporate, W-2) and also earn significant freelancing income on the side. Freelancing income is at least ~$150K / year, and some years materially higher (e.g. ~$250K range). I’m feeling the tax hit pretty acutely, to the point where I mentally discount freelancing income by ~50% when deciding whether a project is worth taking on. I’m already maxing out tax-advantaged options like my employer’s 401(k), but I do need the cash flow, so strategies that primarily defer income indefinitely aren’t very helpful. My question is: what legal, above-board strategies exist to reduce total tax burden in this situation, particularly around how freelancing income is structured? Specifically: Is there a meaningful advantage to taking consulting income via an LLC / S-Corp vs W-2 or 1099? Are there common deductions or planning strategies people in similar situations use that I should be aware of?

I think there is a ton you could do, but I'd need to dive deep with you to help with specific tax strategies

Thank you. I asked my accountant, who could only vaguely recommend "business home office." Any recommendations for a professional consultant?

Besides me? I would need to understand the situation more before I could recommend experts based on their area of expertise.

Thank you, DM'd you.

1. To start, your freelance income should be reported under a business entity so you can properly deduct legitimate business expenses. While a Schedule C can be used, it’s often viewed more closely by the IRS because it’s commonly abused by people trying to write off personal expenses as business costs. 2. A better structure is to operate as an S-Corporation. With an S-Corp, you pay payroll taxes only on the portion of income you take as salary. The remaining profits are distributed as K-1 distributions, which are subject to federal income tax but not self-employment or payroll taxes. This structure is often the most tax-efficient way for freelancers and consultants to operate once income reaches a meaningful level.

Not sure your exact freelance business etc. but Munitz&co is a CPA that focuses on tax strategies for frum entrepreneurs (they were very helpful for me)

Sounds like your accountant does not know very much about strategies to help you save taxes. It sounds like an S Corp would definitely be beneficial in your case. Another strategy is investing in real estate, having your spouse manage them and reach a certain threshold of hours in the real estate business (possible if they aren't working or have a part time job), and then you can deduct rental depreciation losses against active income for income tax purposes. The "Business home office" deduction generally is not very much. It's also difficult to qualify for legally, in many cases. Sometimes using Married Filing Separately status can help things as well, when one spouse is a high earner and one earns much less. All these things and more need to be considered. A good accountant can help you with this.