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.
Those include:
- 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 Ask@NJMoneyHelp.com.
Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.
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