3 Tax Strategies for the Self-Employed

Attention self-employed individuals: Save time and money this tax season with these strategies.

Feb 15, 2014 at 12:00PM

Preparing and filing taxes can be cumbersome, time-consuming, and downright confusing. No one knows this more than self-employed individuals. But tax planning doesn't have to be taxing. Here are three tax strategies that'll save self-employed individuals both hours and dollars.

 Dollar Bills

1. Fund a retirement account to lower your tax bill
Although self-employed individuals don't have the luxury of a built-in workplace 401(k), you have lots of other great opportunities to save for retirement on a tax-deferred basis while reducing your taxable income today. The simplest of these plans, and one that can you still open and fund before the April 15th tax-filing deadline, is the SEP IRA.

Every dollar you contribute to a SEP IRA reduces your business' taxable income. And the contribution limits on these plans are remarkably high. In fact, a SEP IRA can potentially save your business up to tens of thousands of dollars in taxes every year. The SEP IRA allows contributions up to 25% of compensation or $51,000, whichever is less. Keep in mind the maximum amount of compensation that can be used in determining your contribution is $255,000 for the 2013 tax year.  

2. Take advantage of the simplified home-office deduction
If you "regularly and exclusively" conduct business in a space of your home, you're used to filing a lengthy form that requires you to enter a percentage of household expenses for mortgage interest, insurance, repairs, utilities, etc. Under the new simplified option for home office deduction, you now just deduct $5 per square foot of home office space. The limit is 300 square feet, for a $1,500 maximum tax deduction. This strategy alone can save you tons of time when preparing your taxes.

3. Prepare for the health insurance premium tax credit coming in 2014 
In conjunction with Obamacare, individuals and families can soon take a new premium tax credit to help them afford health insurance coverage purchased through an insurance exchange. Starting in the 2014 tax year, you may be eligible to deduct premiums you pay for medical, dental, and qualifying long-term care insurance coverage for you, your spouse, and your dependents. Determine your eligibility and start planning for next year's tax credit. It's never too soon to figure out how to save money on next year's tax bill.

Save time and money this tax season
Taxes don't have to be taxing. Save time and give less money to Uncle Sam by implementing these tax strategies today.

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Follow Nicole Seghetti on Twitter @NicoleSeghetti. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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