Year-end tax planning for two W-2 earners with freelance income: S-Corp vs sole prop

[Jack.M]

My wife and I are both W-2 employees, but this past year I started a significant freelance consulting side business that generated about $40,000 in net income, and I'm realizing our old strategy of taking the standard deduction is no longer optimal. I need to get serious about proactive tax planning strategies before year-end, but I'm overwhelmed by the options for deductions, retirement contributions, and potential business structures. For self-employed individuals or financial advisors, what are the most impactful moves we should be considering now? I'm particularly interested in understanding the real-world benefits of establishing an S-Corp versus remaining a sole proprietor, maximizing deductions for home office and business expenses, and whether a SEP-IRA or Solo 401(k) would be more advantageous for our situation where we also have employer-sponsored retirement plans.