Retire on renewals + avoid self employment

[PCBI]

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.

on top of taking 12,000 off top there are other deductions if u standardize instead of Schedule C lengthy return

Trying to write things off as a business may be a thing of the past and not affect the renewals qualifying

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

Interesting!

 

[scagnt83]

The advantage of filing as an S-Corp is not in the deductions. You can file Schedule C as a Self Employed Individual, it's just not as inclusive/expansive as if you are an S-Corp.

The advantage is in the ability to declare a Wage or Salary Income, and have the rest be paid as Corporate Profit.
Salary Income is taxed FICA.
Corporate Profits avoid FICA, and can be many times more than Salary.

The catch is that Salary must be "reasonable and customary". Courts have used the phrase "what you would pay a competent & qualified 3rd party to perform the same tasks". And of course it takes a bit more admin time/costs. It all depends on your situation on if its worth it. But that is the main advantage of filing S-Corp, not deductions. (especially for an insurance agent who's expenses are usually pretty low)

 

[PCBI]

The advantage of filing as an S-Corp is not in the deductions. You can file Schedule C as a Self Employed Individual, it's just not as inclusive/expansive as if you are an S-Corp.

The advantage is in the ability to declare a Wage or Salary Income, and have the rest be paid as Corporate Profit.
Salary Income is taxed FICA.
Corporate Profits avoid FICA, and can be many times more than Salary.

The catch is that Salary must be "reasonable and customary". Courts have used the phrase "what you would pay a competent & qualified 3rd party to perform the same tasks". And of course it takes a bit more admin time/costs. It all depends on your situation on if its worth it. But that is the main advantage of filing S-Corp, not deductions. (especially for an insurance agent who's expenses are usually pretty low)

I understand the adv of a corp but those days are past as of Oct.

lookn for other deductions as a EZ40 return candidate w turbo tax now into retirement

 

[Allen Trent]

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!

Correct in terms of whether to itemize or take standard deduction for your personal return. Under the new tax laws & limitations on itemized deductions, the majority of Americans will take the standard deduction as most already do.

However, this won't address the fact that you will still have to file a schedule C because your renewals will come on a 1099 that has no way to go directly on the 1040 EZ

 

[PCBI]

Correct in terms of whether to itemize or take standard deduction for your personal return. Under the new tax laws & limitations on itemized deductions, the majority of Americans will take the standard deduction as most already do.

However, this won't address the fact that you will still have to file a schedule C because your renewals will come on a 1099 that has no way to go directly on the 1040 EZ

1040 no EZ?

 

[PCBI]

The advantage of filing as an S-Corp is not in the deductions. You can file Schedule C as a Self Employed Individual, it's just not as inclusive/expansive as if you are an S-Corp.

The advantage is in the ability to declare a Wage or Salary Income, and have the rest be paid as Corporate Profit.
Salary Income is taxed FICA.
Corporate Profits avoid FICA, and can be many times more than Salary.

The catch is that Salary must be "reasonable and customary". Courts have used the phrase "what you would pay a competent & qualified 3rd party to perform the same tasks". And of course it takes a bit more admin time/costs. It all depends on your situation on if its worth it. But that is the main advantage of filing S-Corp, not deductions. (especially for an insurance agent who's expenses are usually pretty low)

another deduction for 1099 contractors!

Contracting Is Now a Better Tax Choice Than a Salary

 

[VolAgent]

I understand the adv of a corp but those days are past as of Oct.

lookn for other deductions as a EZ40 return candidate w turbo tax now into retirement

You can't file a Schedule C on a EZ return, and you can still take the standard deduction on the long form 1040 after filing all the schedules that go with being self-employed and/or owning a pass through entity.

 

[PCBI]

You can't file a Schedule C on a EZ return, and you can still take the standard deduction on the long form 1040 after filing all the schedules that go with being self-employed and/or owning a pass through entity.

Good news!

 

[Rhea Swaze]

Upon retirement, do we still have to keep certified in order to get our renewals?

 

[goillini52]

Upon retirement, do we still have to keep certified in order to get our renewals?

For MA/PDP, yes.