Legal Question in Tax Law in New York

Re: Any tax advantage in forming a Corp. or LLC.

I do not see any tax advantage, as the entities you propose are pass-through entities (assuming you elected Sub "S" status for the corporation), which means you still ultimately pay the tax personally, but would incur the costs of forming the entity, plus possibly have to file extra returns (the entity and then your personal return, although a 1 person LLC can file on Schedule "C" of your personal return without filing a separate return for the LLC). Since you will be receiving the payment on Form 1099, you will be using Schedule "C" anyway to report it. This is good for several reasons: you can deduct on Schedule "C" any expenses that you might have incurred to generate these fees. There are potentially many deductions you can claim to offset the payment, and this should be reviewed with your tax preparer; plus, since the payment will be taxed as self-employment income, you will pay less social security (the net proceeds will be added to your salary to determine your social security limit) but will pay some extra medicare taxes as part of social security. Only real difference on social security is that you pay both parts (employer/employee) for the self-employed income, whereas you only pay employee contribution on your salary.