Hello -
I am seeking clarity in how to describe my employment status this year for tax purposes. I resigned my "day job" in December, cashed out some retirement funds in January 2025, and am using those funds to pay my rent etc. while I write my novel full-time. I'm planning on supporting myself with those funds for about a year (or until I come to my senses and find another day job!).
I understand the tax penalties around cashing out retirement funds before age 59.5, but what I don't understand is how to describe my employment status for this year.
Am I unemployed because I don't have an external source paying me to write?
Or am I self-employed because I am writing full-time and effectively paying myself/supporting myself with the retirement funds I cashed out early?
My guess is that this makes me unemployed, but I saw this forum for questions and figured it wouldn't hurt to ask about the distinction between the two.
Thanks in advance for your guidance.
