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Self Employed Tax Strategies

As a self-employed individual, you have a number of income tax planning opportunities. Here are some you may wish to consider

Solo 401(k) Plan

  • A Solo 401(k) plan is available to self-employed individuals or business owners with no employees other than a spouse, including sole proprietors, partnerships, corporations, and "S" corporations.
  • A Solo 401(k) allows you to make tax-deductible 401(k) salary deferrals to the plan of up to $19,000 for 2019.
  • If you are age 50 or older you can also make an additional catch-up salary deferral contribution of $6,000 for 2019.
  • The plan also lets business owners make tax-deductible profit sharing contributions of up to 25% of compensation, up to the annual maximum of $56,000 for the 2019 plan year.
  • Note that the total of salary deferrals and profit sharing contributions cannot exceed $56,000 ($62,000 if age 50 or older) for 2019.
  • Solo 401k Loans - Tax free loans are permitted with a Solo 401k plan unlike a SEP or a Profit Sharing plan

Long Term Care Insurance

Long Term Care Insurance premiums, up to limits, are deductible for self-employed and their spouse. A schedule C filer does not have to worry about medical expense thresholds to be able to deduct the premium.

Neither Woodbury Financial Services, Inc., nor its Representatives or employees are engaged in rendering legal accounting or tax advice.  If legal advice is required, the services of a practicing professional should be sought.  If tax or accounting advice is needed, contact the currently practicing professionals at Strategic Capital Advisors.