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PDtax, CPA firm owner
Category: Social Security
Satisfied Customers: 4027
Experience:  35 years tax and professional advice in all matters money
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In September 2015 I quit working and took early Social

Customer Question

In September 2015 I quit working and took early Social Security. During the year I had invested in some equipment that provided a passive income, with only a few hours work per month, and which was less than the $1310/mo. I am allowed to earn. I was able to meet my living expenses with this plus some savings and a small (<$20K) inheritance.
Recently my passive income was stopped as a byproduct of a property dispute between two other parties. In some desperation I decided to drive for Uber in order to pay my bills. However, to make the same income as I have lost, I will need to drive more than 45 hours/month in 'self-employment'. It's frustrating that you can make rubbish wages and work as many hours as necessary, but if you make rubbish pay as a self-employed person, you are limited to 45 hours/mo.
Right now I am a sole proprietorship. Is it possible to form an LLC or some other corporate structure that then pays me wages? I am in a real bind, as any reduction in what I am making will make it impossible for me to pay my bills, but if I work more than 45 hours per month I will lose the Social Security.
Submitted: 3 months ago.
Category: Social Security
Customer: replied 3 months ago.
Just adding: I will be 65 in September this year and my full retirement age is 66.
Expert:  PDtax replied 3 months ago.

Hi from just answer. I'mCustomer I can assist.

The first thing I note is that you have been collecting social security for less than a year. If feasible, you could renounce your early claim, repay SSA what you have received, and refile once you reach full retirement age. Then your benefit would go up permanently, and you could earn all you wish in other income. You would need to have other resources to draw upon, but it's an option.

Next is your side work. You could set up an LLC or corporation to take the income, and set up a loan account from it for your cash needs. The LLC or C corporation pays its own taxes, your social security benefit is not impacted, and you can claim the loan monies as I after full retirement age. Then, you pay tax on the income personally, and the LLC or C corp deducts the expense of paying you, which you can claim to get a refund of the LLC or corporate taxes paid earlier.

This allows you to work all you want, and claim the income later on.

You will want to have a tax pro to review my suggestion, and you will have the cost of establishing the entity and of the tax returns, but at least you can earn all you want to see you through. If you drive for Uber, you can deduct all your car expenses as mileage tax free, since the LLC or corp can pay you mileage to reimburse you. The corp gets the deduction, and you don't have additional tax income to report for that portion.

I hope that helps. If so, please rate my response with positive feedback. Use the five star rating scale. I'mCustomer

Expert:  PDtax replied 3 months ago.

"the loan monies as income"

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