I have just become FI at 50 years old.
I now have the option of quitting my business (which is income from writing and licensing). If I do quit my business, royalty income becomes regular income on a different tax form (schedule E). It varies between $10,000-$20,000 a year. If I do keep my business, it is business income (Schedule C).
Which should I do? As of this point, these are the only pros/cons I'm aware of:
Pro:I won't have to pay double social security (self employment tax)
Pros: I won't have to track business expenses
Pros: I won't have to generate new art/writing.
Con: I won't be able to write off business expenses.
Con:I won't be able to deduct my health insurance as a business expense.
Con: I won't be able to contribute to my sep (but perhaps IRA?)
(Extra Question: Do I still have to pay social security if I only live on investments?)
Other info: My income from investments is about $40,000 a year + royalty income.
Right now, between self employment tax, federal tax, california state tax I pay almost 50% taxes (not to mention sales tax and property tax).
