Self Employed Tax Saving Tips
Self-employed taxpayers face specific challenges at tax time, including a 15.3 percent self employment tax. Judicious use of legitimate tax deductions and other strategies can allow these proprietors to keep more of their earnings.
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Deductions
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Self-employed taxpayers can deduct many business and equipment expenses to help lower their taxable income, according to All Business. Home office space, child care and business phones represent just a few common deductible expenses.
Expenditures
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Self-employed taxpayers can control their taxable income through well-timed business expenditures. The purchase of a new computer toward the end of the year, for instance, can offset unexpected earnings.
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Tax-Deferred Savings
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Beacon Capital Management Advisors states that self-employed taxpayers who open a Simplified Employee Pension Individual Retirement Account, SEP IRA, can grow their retirement savings as tax-deferred income. A health savings account allows them to set aside non-taxable savings for medical expenses, according to the Mayo Clinic.
Considerations
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All Business warns that people who wish to take tax deductions must keep meticulous records of their profit, losses, and deductible expenses for the year. A CPA or other professional who knows self-employment tax laws can provide valuable assistance.
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