Self employed people should consider creating solo 401k account, and contribute both as an employer and as an employee, pretax.
Here is the detailed flow chart about savings/tax/retirement etc. This is from last year, and may need some changes.
See, this is why in my retirement I only work for free.
My passive income stream is taxed at a combined state and federal rate of about 12%. Marginal rate for ordinary income is around 30%. Self employment tax brings it to 45% or so. Once I’m eligible for SS and Medicare the numbers look even worse. Then there’s all the accounting time and expense. So these days I do community work.
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Well done.
Am I right working for free is not considered as employed?
As far as I know.
The tax code is good for local communities. It’s terrible for the national debt.