People have been trying to work remotely since long before the start of the pandemic. Ever since the first BlackBerry came on the market, folks could search the web, answer their email, or easily text back to the home office from anywhere with cell coverage.
As we waste away at Margaritaville this month enjoying our Winter Summerland, I see guys that look like my former self hanging out by the pool with their families. While the kids splash around in the water, I see a few guys my age – in their hat and sunglasses – pacing the edge of the pool or sitting under an umbrella looking at their phones.
Besides being a weekday, you can tell they are working because they are so intent on what they are reading or what they are saying to the folks back at the office. They might technically be on vacation, but they are also plugged in.
For many people, the pandemic has recast the idea of a working vacation into an almost permanent vacation. I talked to one guy who sold his house in Maine 18 months ago and bought a cottage here in Margaritaville. He still works for the same company, but he now does so from his Margaritaville cottage. Or poolside.
Some might hate the idea of mixing work with relaxation in paradise, but he said it is really the best of both worlds for him. He has enough experience, expertise, and importance to his company that the work can come to him. So why not position himself in the best possible location?
In addition, we are close enough to the Orlando airport, that he can make a connection to pretty much anywhere in the United States on pretty short notice. He can jet back to Maine – or to a key customer’s office – looking tan & relaxed.
I’m doing that this coming week. I’m leaving Florida for a dinner & daylong Board meeting in snowy Michigan. Even though half of our board is snowbirding in Florida right now, we prefer to do our quarterly meetings at company headquarters, where we can more easily engage with senior management.
Some folks like to portray this new found work flexibility as a Faustian bargain if some sort. That even though we think we have it better, crafty MegaCorps have somehow snookered us into working 24/7 and traveling more. I don’t think that’s the case. When it’s possible, I think more work/home/travel flexibility is always s good thing. If people are choosing when & where to work, they will pick what’s best for them.
How have you incorporated work/home/travel flexibility into your lifestyle?
Image Credit: (c) MrFireStation.com
MrFireStation 
Don’t forget that corporate America convinced remote workers to provide work space and internet access free of charge to the employer. Also, how much has work from home infringed on the teenage child from practicing musical instruments during the day, non-working spouse from vacuuming, I could go on
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Just think of the long term cultural effects of teenagers not organizing garage & basement bands with their high school buddies! Some professor right now will get a taxpayer-funded government grant to study this pandemic-related phenomenon. 😉
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Work from home has pluses and minuses. It helps employees by helping them avoid the cost and lost time to commuting. Sometimes it even allows them to move to a lower cost area, while drawing the same pay, so that they can afford to buy a home. It allowed me to leave work early to watch my kids’ sports when they were younger.
But, work from home, cell phones, instant messaging, and email makes it hard to truly separate work and home lives. It is harder to go offline and really truly get off the clock.
Some of my favorite places to go for vacation are fairly remote places like Big Sur and Sequoia National Forest. No cell phone and no internet allows you to really be on vacation.
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Commuting to the office was the bane of my MegaCorp existence. It’s great to see the flexibility people have now, even if it keeps them connected longer during the day.
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Don’t forget to setup your Solo 401-K, so you can put some of that board 1099 money away. I am working on my 2021 taxes and I always put time in to understand them, so I can maximize my results.
Here is how your 1099 Income gets reported with a Solo 401-K:
1) First you take as much off top of the line on Schedule C for home office expenses, travel expenses and any special services required such as a higher speed internet. Lowering your Schedule C reported profit lowers your Self-Employment Taxes. So keep those receipts. Your net, less these expenses will be your profit that gets reported on line 8 of your 1040.
2) On Schedule 1, you will subtract 1/2 of your Self-Employment Taxes and your Self-Employed SEP, SIMPLE, and qualified plans contributions.
With a Solo 401-K, you can contribute up to 20% of your net profit reported on line 8 as the Employer’s Contribution (really yourself, because you are both the Employer and Employee when Self-Employed), plus up to $27,000 elective Employee Contribution since you are over 50.
If your wife assists you with the business, such as billing, scheduling, and travel planning, you can also fund the 401-K on her behalf with the same up to 20%, plus $27,000.
Schedule 1 line 26 is then entered on line 10, which is above line 11 adjusted gross income. I care about my AGI, so that I can harvest the AOTC for my youngest son in college and keep my wife’s Medicare Part B Premium down to avoid the dreaded tax torpedo.
Putting more money to work with “Let’s Go Brandon” pricing will help drive up lifetime income. Hope this helps.
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The reason why I don’t put my 1099 income during retirement into self-directed retirement vehicles is taxes. I am in a high tax bracket and feel the sting of higher Medicare premiums for my wife. I don’t plan on drawing on deferred accounts until I am required to take my RMD. I will continue at that time to be in a high tax bracket and my RMD will be subject to a much higher rate than I saved in taxes in the 80s and 90s. Granted the returns in those vehicles have not been taxed, but ouch.
So, essentially my savings are for the next generation. I would rather my children receive wealth at a stepped up basis without the requirements to pull money from tax deferred accounts subject to tax (unlike taxable inherited money) during the first ten years after my death.
Yes, I understand your tax planning, but it isn’t always that simple. Yes, first world problems
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I’m in a high tax bracket too – except in 2021. We just lived off savings in 2021, so maybe that gives us an opportunity we haven’t had before. We’ll see.
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I calculated that for a certain income band due to Medicare Part B Premium increasing for my wife and loss of the AOTC for my college student, each incremental dollar gets taxed at 65%. Another thing to consider is maybe the regressive taxation regime of the People’s Republic of California gets to the point where we won’t take it anymore and move our state income tax home to a more tax friendly venue.
Much of my 1099 income was unplanned and larger than expected, so I am treating the bulk of it as a windfall.
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Thanks for the reminder and overview. I’m definitely going to talk to my accountant about the opportunity. I’ve been putting money from my LLC into a SEP IRA each year, so I’m not sure how this works with that. I’m ashamed to say that since I’m goofing off in Florida, I haven’t even talked to my accountant yet (and it’s already 2/24)!
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Take a look at last year’s 1040 and use my notes to walk through where the entries are made. I used this make a spreadsheet to dial in where I want my income to be. 2/24 isn’t late. I am still waiting from some designation of my REIT income in my brokerage 1099’s to take advantage of the 20% Qualified Business Income Deduction. I used to receive limited partnership income and had to wait for March for K-1s.
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