Self Employed Tax Tips

1. The most important tax tip is to maintain detailed records. Not having big business resources to hire someone to track your records, it is up to you to keep receipts of deductions and to maintain thorough records.
   
   
2. You can deduct your professional space: If you are using a separate office space for professional purposes in your home, you can get your taxes deducted. If you use a portion of a spare room in your home or your basement, you are eligible to get the deductions in taxes. You can claim a tax deduction for this percentage from your rent or mortgage payments, utilities etc. Besides, if you use a cell phone or land line exclusively for business purposes, you can deduct the amount from any bills.
   
   
3. Don't overlook any business expenses: Keep records and receipts for all professional travel, office supplies, postal and shipping costs, software purchases, bills for computer maintenance or upgrades, dues for professional memberships, magazine or newspaper subscriptions, and any other business expenses.
   
   
4. Subtract day care costs: There are many deductions that the IRS allows for different types of childcare that are provided during the time you work. It's easy to miss this kind of tax information, but it can save you a lot of money. It's important to take advantage of the available deductions.
   
   
5. Retirement plan creation: Develop a self-employed retirement plan (that is, a SEP IRA) not only for tax purposes, but also for the purpose of creating a corpus that would serve your retirement. One can start with as low as $100, however if one has $2000 or more, one should try the Keogh plan option, which allows one to invest his money in savings for the purposes of retirement and also get the deferred tax option.
   
   
6. Hire members of your family: If this is done legitimately, you may subtract medical expenses for the whole family.
   
   
7. If you must, defer earnings: When you are self-employed, you are permitted to slightly change your billing so that you can postpone income if you discover you are in a higher tax bracket.
   
   
8. Do get refunds for your FICA. Since you are self-employed, you are required to pay both portions of the Social Security Tax, employer and employee. The good news is that you may deduct 50% of your payments on the 1040 form.
   
   
9. If it is helpful, increase expenses. If you wish to augment some of your tax deductions before 31st December, you may make more business purchases at the end of the year. It will help you to defer your income if you have a high income that may push you to the next year tax bracket.
   
   
10. Hire a tax advisor. Ask someone who has extensive knowledge regarding self-employment issues for tax assistance since your needs are much different than that of a business organization.