7 Tax Loopholes That Could Save You Big

Self-Employment Deductions

If you work for yourself, you have to pay both the employer and the employee share of Social Security and Medicare taxes—a whopping 15.3% of net self-employment income. But at least you get to write off half of what you pay as an adjustment to income. You can also deduct contributions to a self-directed retirement plan such as a SEP or SIMPLE plan (and those can cut big chunks off your income).

Also deductible as an adjustment to income: the cost of health insurance for the self-employed (and their families)—including Medicare premiums and supplemental Medicare (medigap), up to your business’ net income. You can’t claim this deduction if you are eligible to be covered under a health plan subsidized either by your employer (if you have a job as well as your business) or your spouse’s employer (if he or she has a job that offers family medical coverage).

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