Retire on renewals + avoid self employment

Nov 5, 2018

  1. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    You are welcome.

    The cheapest and easiest way for a solo business owner to reduce SE Tax is file as an S-Corp. Either as an actual established S-Corp, or as an LLC taking the S-election.

    If making over $200k, then you could look at adding a DB Plan of some type.
     
  2. PCBI
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    PCBI Super Genius

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    Just closed down s corp since the fees were high and income will slowly be juat renewals.

    sep
    deductions
    annuities

    seem like the only way to divert taxes in retirement. Unless u have ither vehicles ?

    thanks again for ur input
     
    PCBI, Nov 16, 2018
    #42
  3. Allen Trent
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    Allen Trent Guru

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    If you have retired, you will have little to no expenses to merely collect renewal checks. I agree you could continue to create deductible expenses on the Schedule C, but that doesn't mean at audit time they will pass the audit test, but worth a shot
     
  4. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    Off the top of my head, LLCs are cheaper than S-Corps to maintain. And you can still file taxes like an S-Corp as an LLC by taking the "S Exemption".

    You could look at investing in Muni-Bonds for tax-free income.

    You could look at income generating investments in general that are only subject to Capital Gains taxes.

    But it seems that your goal is to minimize taxes on business income. And for that singular goal, your options are pretty limited without having a business entity.
     
  5. PCBI
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    PCBI Super Genius

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    all in all just keep working is the best answer to Uncle Sam in pocket
     
    PCBI, Nov 16, 2018
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  6. Allen Trent
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    Allen Trent Guru

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    10% bracket is not up to 28K for single filer, it is only the 1st 9500, 12% then up to $38k, then 22%. Not a big difference.



    taking SS at 62 is likely a bad move. With a guaranteed jump of 8% in your SS check each year, best to wait to 65,67 or 70 even if it means accessing more of your savings in retirement accounts/life/annuities to live on from 62-65. where else can you get a guaranteed boost of 8% for life for each year you delay. Wait to age 67 & that is 40% larger SS checks for life than taking them at 62
     
  7. PCBI
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    PCBI Super Genius

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    yes, i wanted to simplify retirement taxation which may sound a bit foolish, but its the direction I am going aft dissolving corp in Oct. I have done the corporate s for years and got tired of all the fees, reports as a one person employee. Not interested in more than selln a myself an annuity or SEP contribution. Seems like the simple route has his pros and cons. no problem filing qtrly on tax turbo and free of the many arms wanting paid.
    thx
     
    PCBI, Nov 16, 2018
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  8. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    Somebody believes that taxes will be the same or lower in their retirement years. Otherwise, they wouldn't be limiting their choices to accounts that have an IRS Lien on their retirement savings.

    https://www.getoffthetracks.com/
     
    DHK, Nov 16, 2018
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  9. PCBI
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    PCBI Super Genius

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    i agree. matters whether I have to or not. If renewals go for 10+ years then its all good.
     
    PCBI, Nov 16, 2018
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  10. PCBI
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    PCBI Super Genius

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    So much for schedule C this article sways me to do an EZ40 return.

    Itemized Deductions or the Standard Deduction: Which Is Better? - NerdWallet


    If total income is about 40,000 renewals a single person gets 12,000 of standard deductions. If I put 6,000 into an SEP the net taxable income is 22,000. I assume 28,000 would be taxed under self employment?

    Why would I itemize if I cannot find 12,000 worth if deductions?

    thanks for ur input!
     
    PCBI, Nov 16, 2018
    #50
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