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Old 12-11-2017, 12:24 PM   #21
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Originally Posted by steveinjersey View Post
....My boss didn't want to lose me and has offered twice my current rate to work part time as a consultant. I believe that as a consultant I would be required to file taxes quarterly and pay double social security and Medicare taxes. Detailed expense records also would need to be maintained. I don't want to complicate my life at this point. The tax/expense record side of his looks like a headache even if the money makes sense for the work performed. I don't need the money. I don't need tax stress. ....
I ended up not consulting with my for employer after I retired but you are making a mountain out of a molehill.

As an early retiree, you may well need to do quarterly estimated payments whether you consult or not depending on your tax situation and even if you do need to do estimated payments it is a pretty simple thing. Self-employment taxes is a simple form off your tax return but is basically your self employment profit times 15.3% but you get to deduct 1/2 of it.... if you use software to prepare your return it sort of happens automatically but you do need to consider it in your estimated payments.

If the tax reporting is your biggest concern, see if he's willing to just keep you on payroll as a part-time or hourly employee... that way they handle the tax stuff and you just get a W-2 like you do now.

At my former employer, if you worked 50% or more (20 hrs/week or more) then you were eligible for benefits just like a FTE, only pro-rated other than health insurance, which was the same as a FTE.
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Old 12-11-2017, 12:30 PM   #22
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Originally Posted by steveinjersey View Post

I believe that as a consultant I would be required to file taxes quarterly and pay double social security and Medicare taxes. Detailed expense records also would need to be maintained. I don't want to complicate my life at this point. The tax/expense record side of his looks like a headache even if the money makes sense for the work performed. I don't need the money. I don't need tax stress.

This consulting work would be a favor to a good boss and friend. I almost wish that I hated my boss.

Steve
Steve, re-read this paragraph of your post. It sure sounds like you are asking us to talk you into it, and that is a serious red flag.

This will most likely be a "no good deed ever goes unpunished" type deal if you try to help your boss. My guess is that sooner or later, they will forget that you are "doing them a favor" and the pressure/stress will follow.

I am self employed PT now in retirement. Have been self employed 40 years. Trust me, if I can handle the paperwork, it will most likely be a piece of cake for anyone even slightly organized. The tax deductions far outweigh the hassle in my opinion (see other comments posted about the benefits). I agree with the take 6 months to decompress first comment.
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Old 12-11-2017, 12:37 PM   #23
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DW retired from an accounting job some years back. They later asked her to come back as self-employed to close the books for the year. We did some calculating and went back saying OK. I think her price was around 2X her last hourly rate. They had no benefits to pay her, no SS, no unemployment insurance, no 401K match expenses, no health insurance, etc, As self-employed We had most of that, plus the employer's share of SS to cover. And we explained that to them. (Plus we added a small bit for their convenience of "needing" her. We didn't "need" them.)

They expected to bring her in self-employed at her last hourly rate. Needless to say they couldn't meet her terms and she didn't get the gig. The boss told my wife's old co-worker. "She doesn't understand. She won't get any good job references from me!" The co-worker simply replied,"She doesn't need any references. She is retired!" I guess some people just don't understand the word "retired".
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Old 12-11-2017, 12:51 PM   #24
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This will most likely be a "no good deed ever goes unpunished" type deal if you try to help your boss. My guess is that sooner or later, they will forget that you are "doing them a favor" and the pressure/stress will follow.
Big thumbs up to this point.

I had this experience before I even agreed to help.

An old acquaintance was setting up a consulting firm and wanted me to be his atty. He called and left me a message on a Saturday morning asking if we could have a call on Sunday to discuss this wonderful *opportunity*. He stressed that the money would be good, I could work as much or as little as I wanted, on a schedule of my own choosing, blah, blah, blah.

I called back and got his voice mail. In my message I said I never worked on Sundays, but said I could be available as early as 7am Monday. On Sunday, he called 5 times, left messages, texted me several times, and then called my wife to complain that I wasn't being responsive.

When I saw my phone all blown up with his calls and messages, it was obvious that, despite his assurances of flexibility, he would expect me to be at his beck and call at all hours. I had no hesitation turning down this great opportunity.
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Old 12-11-2017, 01:00 PM   #25
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My former employer wanted me to be available on an as needed basis and thought offering me an hourly rate 5% higher than my previous salary was "generous". I countered with a rate that was equivalent to my previous rate plus benefits, additional tax costs and prior years bonus. They were aghast because it was more than 50% higher than my previous "base". I told them I didn't need the work, why would I work as a self-employed consultant for less money than I had previously especially when business was showing growing sales and profitability. Don't expect I will hear from them unless they run into a dire emergency and if that happens I will most likely decline any offer.
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Old 12-11-2017, 01:33 PM   #26
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My former employer wanted me to be available on an as needed basis and thought offering me an hourly rate 5% higher than my previous salary was "generous". I countered with a rate that was equivalent to my previous rate plus benefits, additional tax costs and prior years bonus. They were aghast because it was more than 50% higher than my previous "base". I told them I didn't need the work, why would I work as a self-employed consultant for less money than I had previously especially when business was showing growing sales and profitability. Don't expect I will hear from them unless they run into a dire emergency and if that happens I will most likely decline any offer.
No offer of consulting work, regardless of terms, should be unwelcome: it's always nice to have options. But employers shouldn't be surprised when retirees who don''t need the money demand that those terms be reasonably attractive.

Corporate CEOs aside, most workers are used to having little or no bargaining power with current or prospective employers. It's so nice for the shoe to be on the other foot: a major benefit of FIRE!
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Old 12-11-2017, 05:32 PM   #27
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Thanks everyone for the great advice! Steve
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Old 12-11-2017, 06:45 PM   #28
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I went from ajob to self employed. My contractor hourly rate is at least twice what I might get at an hourly job (and more than that compared to my previous job)
I think my clients are thrilled and know that its a great deal for them.
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