11 Oct I’m retired. How much will I owe in taxes if I freelance?
Q. I am 84 years old and I collect $18,500 yearly from Social Security. I have an opportunity to freelance for $30,000 annually. How much will I have to pay in income taxes?
— Going strong
A. Determining your income tax burden is complicated and many factors will come into play.
For starters, New Jersey does not tax Social Security income but the federal government does.
Before you can get an accurate estimate of what you may owe in taxes, you have to consider several aspects of your life, said J. David Principe, a certified financial planner with SAGEbroadview Wealth Management in Morristown.
- Are you married or single?
- Are you a veteran?
- Is there any investment income or loss to consider?
- Are there any Required Minimum Distributions from IRAs or other retirement accounts?
- Is the freelancing work truly self-employment income — which would be subject to self-employment taxes — or will you actually be getting a paycheck with payroll taxes withheld?
- Is this work going to be in New Jersey or is it in another state?
- Could the you be subject to underpayment penalties?
You could try to run the numbers using something like Free TurboTax, he said.
“However, our recommendation would be to consult with a qualified tax professional to discuss the considerations above as well as any others that may apply in order to plan appropriately,” Principe said.
Email your questions to .
This story was originally published on Oct. 11, 2021.
NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.