Tax Prep for 1099 Contractors and Corp-to-Corp Consultants
S corp structure, quarterly estimates and retirement planning for independent contractors, IT consultants and government subcontractors in the DC area
Keep More of Every Hard-Earned Dollar.
Tax Wise Financial Services prepares taxes and plans year-round for independent contractors and corp-to-corp consultants, most of them in the Northern Virginia government contracting and IT market: cleared consultants working through staffing primes, IT and cybersecurity contractors, project managers, nurses and healthcare contractors, and freelancers paid on 1099-NEC. A contractor earning $180,000 as a sole proprietor pays roughly $22,000 in self-employment tax before income tax. Our planning is built around the LLC taxed as an S corp: a reasonable salary for the work you do, the remaining profit taken as distributions not subject to self-employment tax, and the Section 199A deduction on top. We add an accountable plan for home office, internet, phone and mileage, the S corp owner health insurance deduction, and a Solo 401(k) that can shelter up to $70,000 or more a year between employee deferrals and employer contributions. We run your quarterly estimated taxes so there are no penalties or surprises when a contract ends or a new one starts.
Proof You Can Trust.
You receive a written entity selection memo, a reasonable compensation study, and our S corp launch kit: EIN, Form 2553 (with late election relief when available), payroll setup through Gusto or ADP, Virginia registrations, and the operating agreement checklist your prime or staffing agency will ask for before approving corp-to-corp status. Quarterly projections tie your books to your estimates. Our “commonly missed” review covers multiple 1099-NECs and 1099-Ks, a 1099 that does not match deposits, mixed personal and business accounts, no mileage log, late payroll tax deposits, and health insurance paid personally instead of through the S corp. [Insert anonymized case: e.g. “A cleared IT consultant billing $210,000 corp-to-corp saved $X in year one after the S corp election and Solo 401(k).”] Premium packages include IRS and Virginia notice handling and audit protection. Transparent pricing and a 3-business-day response promise.
Wins This Year, Not Someday.
In the first 30 days we form the LLC, file the S corp election, open business banking, set up payroll with reasonable compensation and turn on the accountable plan. We open the Solo 401(k) before December 31 so employee deferrals count this year, schedule your estimated payments, and set up bookkeeping that tags home office, equipment, certifications, client travel and vehicle use correctly. Before year-end we time equipment purchases against Section 179 and bonus depreciation and finalize your salary versus distribution split. If you are mid-year and already on 1099, we evaluate a late S corp election so this year is not lost.
Fast response times.
Our secure portal and smart organizer, built for contractors, ask for your prior-year return, 1099-NEC and 1099-K forms, bank and credit card statements, mileage export, health insurance documents, retirement statements, and your contract or staffing agreement. We handle payroll filings, Virginia withholding and unemployment registrations, annual reports and year-end W-2s and K-1s. Unlimited email support covers mid-year questions when a contract changes or a prime asks for new paperwork. Virtual appointments are standard. With 20% to start and the balance at delivery, you see our work before paying in full.
Frequently asked questions
How much self-employment tax does a 1099 contractor pay?
15.3% on net earnings up to the Social Security wage base and 2.9% above it, on top of regular income tax. On $150,000 of profit that is roughly $19,000 before income tax.
At what income should a 1099 contractor become an S corp?
Typically once net profit is consistently above $60,000 to $80,000. The savings come from paying self-employment tax only on your salary and not on distributions, which has to outweigh payroll costs and the extra tax return.
What does corp-to-corp mean for taxes?
You contract through your own entity, usually an LLC taxed as an S corp, and the prime or staffing agency pays your company instead of you. You run payroll for yourself, file an 1120S, and issue yourself a W-2 and K-1.
How much can I contribute to a Solo 401(k)?
Up to the annual employee deferral limit plus an employer contribution of 25% of W-2 salary, with a combined cap of $70,000 or more depending on the year and your age. It is one of the largest deductions available to a contractor.
Do I need to pay quarterly estimated taxes as a contractor?
Yes, unless you run payroll through an S corp and withhold enough there. Missing or underpaying estimates triggers penalties even if you pay in full in April.
