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Our old friend Facts & Circumstances decides what type of income miscellaneous income is. You can get some guidance from Pub 535, but you're not going to find a bright line anywhere. As is usual, I'm most interested in the unstated: what's your day job? how did you come by these gigs? why the increase in workload?

During the day and usually most nights, I'm a physician seeing patients, and also work in a laboratory.

The income is an "honorarium" for writing summaries of research articles for a publisher which then bundles the summaries and sells them to physicians who just want to read the cliff's notes version. I was approached by the publisher, who asked if I would be willing to write of few of them this year.

From my readings, it seems that I most likely will not get into any trouble with IRS regulations for declaring my freelance income as generated from my new sole proprietorship whose business is to write these articles periodically as a sub-contractor. Now, as to whether I could just declare this miscellaneous income and avoid FICA and it still be kosher, I'm not so sure.

However, it seems that even with only $1000 in schedule C income, I would be eligible for an individual 401k, and would be allowed to make employee and employer contributions. I already max out my employers 401k, but I could make an employer contribution, to myself, of 25%(?) of my schedule C profit.

So I want to do this the right way, I it SEEMS that I should declare this as self employment income. However, even if an argument could be made that I this was a grey area and maybe could be miscellaneous income, that perhaps I may want to declare it as business income ANYWAY, if I get to add some more dollars to tax-advantaged accounts. Another benefit is that I have an orphan 401k that I MAY be able to rollover to this new solo 401k, and avoid some of the fees I'm currently paying.

Just wondering if it's worth the hassle of doing this work because it takes me 10-12 hours for each article, and it come out of my limited free time. So that's why I'm wondering of course about the taxation and any secondary over-looked benefits.

FFL
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