Early retirement and ssa benefits tax planning

Technical topics regarding tax preparation.
#1
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511
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29-Sep-2015 10:10pm
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Gray, TN
I'm trying to come up with some ideas for a TP and SP to avoid a reduction of their SSA Benefits (early retirement).

Facts
1. TP expects to have $50k in self employment income in 2022 as a sole proprietor. (Spec House Builder LLC)
2. SP has her own sole prop but barely breaks even most years.

Options I've come up with:
1. Spec House Builder LLC becomes a TP/SP partnership. (TN - not community property)
2. Spec House Builder LLC becomes a C Corp, TP/SP are paid $19k each plus health benefits and other benefits to make $0 net income.

What else am I missing? SEP doesn't reduce income for the SS earnings test, correct?

Unfortunately, a $30k tax planning fee was not palatable.
 

#2
JR1  
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Location:
Western 'burbs of Chicago
Try this: have him bury the amount of the SS benefit into a SEP off his biz. That way, he zeroes out the tax hit while getting the money. Well, with only 50k profit, his SS benefits are likely much larger. So might need to substitute for a SIMPLE or something that would let him stash more.

And right, a SEP won't reduce for the test, but you can trade the dollars, effectively offsetting the SS benefits.
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#3
Posts:
511
Joined:
29-Sep-2015 10:10pm
Location:
Gray, TN
Thanks, JR. I'll do the math on that. Interesting idea.
 


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