Regardless of your employment situation, you must pay taxes on your earnings derived from your trade or practice. In order to minimize the taxes you owe, you will want to read more about these 9 self-employment tax deductions useful for optimizing your tax return.
When possible near year end, you can accelerate certain expenses to count as tax deductions in the current year. This pulls forward deductions you normally may have taken next year to depress your taxable income this year.
Defer Income and Accelerate Self-Employment Tax Deductions to Avoid Higher Tax Brackets
In the case of self-employment, one major drawback is needing to pay more in taxes. Specifically, the employer portion of payroll taxes (Social Security and Medicare taxes), also called self-employment taxes.
One of the best ways to lower your taxable income is to make contributions to your retirement accounts. Because you are self-employed, you will not have access to an employer-sponsored 401(k) plan as your Form W-2 counterparts do.
Funds contributed to HSAs enjoy a triple tax-advantaged benefit. First, no taxes are paid on contributions made to the health savings account; second, no taxes are made on withdrawals for HSA eligible expenses; and third, no taxes are paid on gains realized from funds held in the account.