@johnb974 wrote:
@luckygirl0100 wrote:
@johnb974 wrote:
@ceasesmith wrote:
John, if $7,000 is taxable, you're $6,000 better off than if you hadn't shopped.
What's the problem?
Kinda reminds me of my friend who hit a casino jackpot for $36,000 and griped because she had to pay taxes on it. I told her to give me the $36,000 and I would HAPPILY pay the tax on it.
If the line for paying SE is $6000, I would be keeping more of my money.
I'm glad johnb974 isn't doing my taxes....
Duuuuuuuuuuude! You really aren't comprehending! Please have a professional prepare your taxes.
If the first $6000 is not taxable for SE, you keep more of your money. Where did you learn to do math?
@olympia tennenbaum wrote:
Does everyone claim a home office? I'd think that could also help defray the taxes. I'm still looking into it and learning about it. My only concern is how it affects that sale of your home later.
@olympia tennenbaum wrote:
@myst4au wrote:
Since 1968 (when I paid $50 in SS taxes), I have contributed a total of $169,370 in SS taxes. I started collecting in May 2021. By the end of 2023, I will have collected $102,317 and by the middle of 2024, I will have received more in payments than my total contributions. It will take the remainder of 2024 plus 2025 and 2026 to collect more than the employer's contribution. At that point, I will be 74 with a life expectancy of 12 years. I will have collected many times the money paid into SS by me and various employers.
$3,300 a month? That seems high. I'm still a bit further out so I'm not that proficient in all of it. I remember reading something like $1500 was the average SS check. (A quick google search provided the info in case anyone else was interested $2484 was the average in 2022 for people who started collecting at age 65.)
Don't forget about compounding. In 55 years, that $50 at 7% interest would be worth $2065 today.
@myst4au wrote:
I agree that it is above the average, but it is what I receive. I paid the maximum possible for SS for about two decades (as required by law) and I delayed collecting beyond my so-called "full" SS year since for every year that I waited, my benefit increased by a guaranteed 8%.
Since benefits scale with the amount of SS payments made by an employee every year, my results should be roughly in line with an employee who contributed 50% ($84,685, for instance) of what I did in the sense that it should take roughly 4 years to receive as much as they paid in and another 3 to 4 years to receive as much as their employers sent in. Of course, starting to receive benefits at age 62 results in losing about 40% of the monthly amount (8% a year for 5 years), I could have had more if I had waited until age 70 to start collecting, but I based my decision on the breakeven year vs my life expectancy. I would also have had to tap into my 401K to replace the SS I was not receiving.
You are correct about saving early for retirement. 401K plans began in November 1978. I began contributing to a 403B (the academic equivalent of a 401K) in August 1978 (403B plans go back to 1958). My money grew tax-deferred during both the 7 years that I contributed to that 403B (and of course thereafter), as did my subsequent contributions to a 401K for 30 years. As a mystery shopper, I also contribute to a SEP IRA every year.
The power of compounding is huge, especially if you start young. I gave my granddaughter a $1000 Roth IRA when she graduated from high school at age 17. The funds are invested in a broad stock market index fund. Assuming "normal" stock market returns, the account will be worth $128,000 if she leaves it there until age 72 ("only" $64,000 at roughly age 64), and it will all be tax-free.
@olympia tennenbaum wrote:
@myst4au wrote:
Since 1968 (when I paid $50 in SS taxes), I have contributed a total of $169,370 in SS taxes. I started collecting in May 2021. By the end of 2023, I will have collected $102,317 and by the middle of 2024, I will have received more in payments than my total contributions. It will take the remainder of 2024 plus 2025 and 2026 to collect more than the employer's contribution. At that point, I will be 74 with a life expectancy of 12 years. I will have collected many times the money paid into SS by me and various employers.
$3,300 a month? That seems high. I'm still a bit further out so I'm not that proficient in all of it. I remember reading something like $1500 was the average SS check. (A quick google search provided the info in case anyone else was interested $2484 was the average in 2022 for people who started collecting at age 65.)
Don't forget about compounding. In 55 years, that $50 at 7% interest would be worth $2065 today.
@mystery2me wrote:
Also, when you sell your primary home, the first $250,000 in profit if you are single and $500,000 if married filing jointly are exempt from taxes, so the depreciation from claiming a home office is unlikely to have any effect at all unless you are a boomer who was able to take advantage of cheap housing way back when.
@BirdyC wrote:
@mystery2me wrote:
Also, when you sell your primary home, the first $250,000 in profit if you are single and $500,000 if married filing jointly are exempt from taxes, so the depreciation from claiming a home office is unlikely to have any effect at all unless you are a boomer who was able to take advantage of cheap housing way back when.
I'm not 100% sure and just moved my old files to another room so they're not easily accessible right now, but I think that the capital gains thresholds on the sale of personal primary residences doesn't fully apply if you've taken the depreciation for a home office. I'd have to look it up, though.
@myst4au wrote:
Honestly, you would need to consult a good CPA or tax attorney.
All income is reportable. There's a difference between reportable and taxable. The 1099 you receive has nothing to do with whether or not your income is taxable.@johnb974 wrote:
If the first $6000 is not taxable for SE, you keep more of your money. Where did you learn to do math?
@BirdyC wrote:
@myst4au wrote:
Honestly, you would need to consult a good CPA or tax attorney.
Which is exactly why I do and why most people who are self-employed should. I know some SE people who cheat themselves tax-wise by not using a CPA or certified tax preparer. It doesn't have to be a CPA or tax attorney. I've used both, and the guy we use now, a tax preparer, is just as good as the CPA I used for years until we moved to another state. His fees are very reasonable. It doesn't have to cost an arm and a leg to have SE taxes done professionally. The fee is tax-deductible, too. At least the portion of them that are your business taxes. Our guy does our personal and my business ones, so only part of his fee is deductible.
As someone else, in addition to me, mentioned, the tax implications when you sell of claiming depreciation for a home office are not significant, even if you make a large profit.
@johnb974 wrote:
Many people like myself could not afford a CPA or tax attorney. I gross less than $13,000 a year doing mystery shopping. The rest of my income is Social Security. I do use Turbo Tax for my taxes.
@luckygirl0100 wrote:
@johnb974 wrote:
Many people like myself could not afford a CPA or tax attorney. I gross less than $13,000 a year doing mystery shopping. The rest of my income is Social Security. I do use Turbo Tax for my taxes.
Sounds like you need to work on your business, unless you are happy with 13k per year?!?!
@johnb974 wrote:
A lot depends on where you live and how far you're willing to drive. I could pick up $100 shops if I was willing to drive 70 miles.
@johnb974 wrote:
A lot depends on where you live and how far you're willing to drive. I could pick up $100 shops if I was willing to drive 70 miles.
@sandyf wrote:
Wow, yet another huge difference in costs. I live in Los Angeles. My tax acct for many years started having cognitive difficulties. I searched and searched for a new person. I contacted four different tax businesses with references from customers I know. None were taking on more work due to a shortage of tax preparers. I finally found one willing to do my taxes. He wanted $1000 for mine, and $500 for my daughter who was a student with little income.
@sandyf wrote:
Wow, yet another huge difference in costs. I live in Los Angeles. My tax acct for many years started having cognitive difficulties. I searched and searched for a new person. I contacted four different tax businesses with references from customers I know. None were taking on more work due to a shortage of tax preparers. I finally found one willing to do my taxes. He wanted $1000 for mine, and $500 for my daughter who was a student with little income. I finally ended up with Turbo Tax. The business version was around $100 and I can file for 5 people with that. They are very thorough. As long as you listen to what they ask and do not cheat on your answers their step through asks about many different places you can save.
Sure there are these little places on the street that will charge me a low fee but they specialize in easy returns. Their customers boast that their returns were done in 15 minutes. That is not the type of tax preparer I can trust with my returns to get the best savings.
So be careful hiring someone. Seems like I should just mail my info to someone where you live!
@luckygirl0100 wrote:
@johnb974 wrote:
A lot depends on where you live and how far you're willing to drive. I could pick up $100 shops if I was willing to drive 70 miles.
I'm in the suburbs of Chicago. I live in Indiana, takes me about an hour to get into the city or if I go 30 minutes in the other direction all I can see are cornfields (maybe soy too,lol)
My shopping is limited by the number of hours my kids are in school. I can plan longer routes when my husband is off but honestly I don't do this unless the $$$ is AMAZING. I don't shop to pay the bills, I shop because I don't like not having a job. (Can't return to my career due to my daughter's medical condition and needing to be available if she should need me)
I still make over 3x what you are saying you make... and no, it's not because of orphaned $100 shops and obviously not because of a million $5 ones....
I take pretty much the entire month of December off due to our Advent calendar of fun family activities. I take lots of time off for kids activities... i DEFINITELY don't put in even 20 hours a week if you were to average the entire year.
@SOTXshopper wrote:
Hmmmm while I 100% agree a CPA pays for themselves in tax savings I'm very curious about being able to make over $30,000 on a SHM/travel sports schedule with shops. I did that life and now with my kids off at college I was finally able to hit the 5 figure range, but I can't imagine tripling that. I do live in one of the lowest cost of living areas, but still doesn't seem to account for that much difference. Hints to high dollar shops?
@luckygirl0100 wrote:
@johnb974 wrote:
A lot depends on where you live and how far you're willing to drive. I could pick up $100 shops if I was willing to drive 70 miles.
I'm in the suburbs of Chicago. I live in Indiana, takes me about an hour to get into the city or if I go 30 minutes in the other direction all I can see are cornfields (maybe soy too,lol)
My shopping is limited by the number of hours my kids are in school. I can plan longer routes when my husband is off but honestly I don't do this unless the $$$ is AMAZING. I don't shop to pay the bills, I shop because I don't like not having a job. (Can't return to my career due to my daughter's medical condition and needing to be available if she should need me)
I still make over 3x what you are saying you make... and no, it's not because of orphaned $100 shops and obviously not because of a million $5 ones....
I take pretty much the entire month of December off due to our Advent calendar of fun family activities. I take lots of time off for kids activities... i DEFINITELY don't put in even 20 hours a week if you were to average the entire year.