ezeiza: In 2007 I started moonlighting for extra cash and I'm considered an idependent contractor, not an employee. I therefore have not paid any taxes on the money earned yet (in 2008 I will have to start paying quarterly taxes on this money).
In about 2-3 years my salary should increase significantly and I will therefore be in a higher tax bracket. I wil likely have a fairly hefty tax bill this year. Does it make any sense to start a SIMPLE or SEP IRA at this point in time given the likely increase in my future tax bracket? Thanks so much for the advice.
Jay-B
Two points. 1. Instead of estimated tax payments, you can increase your withholding at your full time job to compensate. This can be easier and withholding even if it is done late in the year is considered as if it was done equally for the whole year.
2. Depending on your sef-employment income a solo 401k may give you more options for retirement savings. So that should be one other option to consider.
