Some stuff about taxes that I don't know

[pb4uski]

Ran same numbers with Taxbrain; 8.711, 15,856 and 21,223 so broadly similar to TaxCaster.

 

[target2019]

I had used $1,000 less for the RMD and SS for the year. I corrected results in my reply above. The tax is somewhat higher in all cases.

 

[redduck]

One possible gainer in your favor is if you contribute to some type of retirement account. If you have a SEP-IRA, you could achieve a tax credit for some of your self-employment profit. Not familiar with other options, but probably different type of plan would let you put away larger amount.

With Intuit ProSeries I calculate $5,127 Fed inc tax., no self employment.
$20k self emp, $13,806.
$35k self emp, $19,135.

With a SEP contribution of $6505 for the year (based on $35k profit), you would have tax bill of $16,835.

Also, you need to make estimated payments to avoid a penalty.

I do have both a Roth IRA and a SEP-IRA (along with an Traditional IRA).
So, could I continue to put money into both the Roth IRA and the SEP-IRA if I continued to work? (I thought I had to take the RMD out of the SEP-IRA).

 

[target2019]

I do have both a Roth IRA and a SEP-IRA (along with an Traditional IRA).
So, could I continue to put money into both the Roth IRA and the SEP-IRA if I continued to work? (I thought I had to take the RMD out of the SEP-IRA).

The Roth IRA + IRA is 6K max. If you have earned income, then can contribute. I put in 6K for your Roth, and it was not limited.

The SEP-IRA is separate contribution, and is based on your Self Employment profit.

If you are in RMD territory for the IRA, then same goes for the SEP-IRA. But you can still contribute if meeting the requirements.

But all standard disclaimers apply. This is not tax advice.

If you had a copy of Turbotax home and business installed, you'd have better understanding of all this. You could plug in different numbers and decide for yourself if you want to stay in the working game. I admit I can't see myself not staying invloved in some way with self employment. But after starting SS, I will definitely scale back to stay under certain tax limits.

 

[redduck]

<snip>... I admit I can't see myself not staying invloved in some way with self employment. But after starting SS, I will definitely scale back to stay under certain tax limits.

Yes, I completely understand this is not tax advice.

Why would you stay in the working game if self-employed?

 

[target2019]

Why would you stay in the working game if self-employed?

I will try to stay self-employed at a minimal level, say 10-15K per year. I will be able to use this income to pay for a few toys and real estate taxes. Whether the self-employment market wants me will be another story. I have a few skills in demand,.

 

[pb4uski]

I don't think I would bother with self employment if I had "enough" (eg; 100% success rate with Firecalc) and knowing that such a high portion of my self employment efforts were going to the government. I don't recall what you do redduck but I have a friend who is retired, has more than he needs and just does some work here and there for cheap or free to help people out. He hates paying taxes.

 

[redduck]

I will try to stay self-employed at a minimal level, say 10-15K per year. I will be able to use this income to pay for a few toys and real estate taxes. Whether the self-employment market wants me will be another story. I have a few skills in demand,.

I don't think I would bother with self employment if I had "enough" (eg; 100% success rate with Firecalc) and knowing that such a high portion of my self employment efforts were going to the government. I don't recall what you do redduck but I have a friend who is retired, has more than he needs and just does some work here and there for cheap or free to help people out. He hates paying taxes.

I like the idea of working two half days a week so I can buy stuff that's a notch better and feel good about it. For example, it's the difference in buying a generic HVAC or getting a Lennox HVAC. Anyhow, I have found over the years I do make mistakes in buying things and working helps alleviate some financial mistakes (big and small). Additionally, I'm not very handy (even though I have three hammers). I pay to get things fixed. Paying for help gives me a sense of freedom, even if I have to work for that freedom. I'm definitely not a DIYer, except when it comes to financial investments (i.e. stocks and mutual funds). Why I think I can do that, I don't know.

I don't hate paying taxes, but perhaps I could learn. I know I won't like paying taxes at high rate. Luckily, my work is often enjoyable and isn't especially stressful. Occasionally I feel I'm overpaid. (I'm not sure that's such a good thing to feel).

As to working next year: I still don't know. For me, it has a bunch of pros and cons (o.k., o.k a few pros and cons). But, now I have helpful information to allow me to make a better informed decision.

What I will hate is, giving up the one big pro: my favorite tax deduction of $8,500--that of my Platinum executive membership to the Early Retirement Board. The Platinum membership apparently comes with a pair of monogrammed pajamas which I have not yet received. Andy, you want to get on that?

 

[Al in Ohio]

A Lennox is a generic HVAC!

Sub par to a Trane or Carrier unit IMO