FICA TAX Question (EMPLOYEE and EMPLOYER/EMPLOYEE SIDE BUSINESS)
I'm hoping a tax expert can answer this question I have.
In my current job, I make close to the fica cap which my employer pays both employer and my portion as the employee. I only contribute the matching 5% to my 401k which is around $6,645.00 bc it's a guaranteed 100% return. My reasons for not wanting to invest any more than the matching is due to the very limited control i have.
I want to open a side business due to the extra income I am already making. From my research so far, I've determined an LLC taxed as an s corp appears to be the best option. I also want a Solo 401k and plan to pay myself $150,000 so that I contribute 25% of my salary as the employer which is $37,500. Then I'd like to make the rest of my own contribution as employee of ($19,500-$6645) = $12,855 to equal the maximum allowable of $57,000 (37500+12855+6645) If this is how this works...I'm assuming 57k is max across everything...
My question is, since my main job has already payed both the employer and employee portion of the social security tax, will I only have to pay medicare taxes on my 2nd business? The potential tax savings I'm calculating after solo 401k deductions appears to be enormous versus not opening the business at all and I can't help but wonder if I am missing something? Are my assumptions correct on the solo 401k how everything is calculated? Thank you
Zach