Income above retirement

@Bryan Douglas  thank you for the question and congratulations on your “working retirement”.   Ultimately, you will pay all the taxes from your private practice when you file your taxes next year.   Since you did not say how much your income is expected to net from your private practice, I would suggest that you may want to make estimated payments of taxes to both the Federal and State, if your state has an income tax.

Much of this would depend on  both the amounts and the withholding of taxes from Social Security and your pension, though let’s do a quick example of income from your sole proprietorship.  For every $1,000 of net income, you would need to pay Self-Employment taxes of 15.3%, plus federal taxes, which range from 10% to 37%, and state taxes potentially as well.  Taking the lowest percentages, the tax would be 26.3%.   The tax bills could be significant, so you want to get out ahead of this and estimate what your net income is and make estimated payments.  There is nothing worse than an unexpected bill. 

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