By: Edward J. Leach, CFP®, MBA, CEPA
Being self-employed comes with plenty of perks—flexibility, control over your income, and the ability to shape your career. But it also comes with responsibilities, including staying on top of taxes. One way to reduce your tax burden is by taking advantage of every deduction available to you. Given we are in the middle of the 2024 tax season, here are some key deductions you shouldn't overlook.
1. Self-Employment Taxes
Self-employed individuals must pay both the employer and employee portions of Social Security and Medicare taxes—amounting to 15.3%. However, you can deduct the employer-equivalent portion (half) of these taxes on your return.
2. Home Office Deduction
If you use part of your home exclusively for business, you may qualify for a deduction on rent, mortgage interest, utilities, and even property taxes. There is also a simplified method for calculating your deduction, allowing you to deduct $5 per square foot (up to 300 square feet).
3. Health Insurance Premiums
Self-employed individuals who pay for their health insurance (including dental and long-term care) can typically deduct these expenses, reducing taxable income.
4. Retirement Contributions
Contributing to a Solo 401(k), SEP IRA, or SIMPLE IRA can help reduce your taxable income while building long-term savings. To learn more about which plan is right for you, check out our blog post from mid-2024, "Retirement Plan Options for Business Owners: SEP IRA, Simple IRA, 401(k), and Defined Benefit Cash Balance Plans".
5. Business Expenses
If it's ordinary and necessary for your business, it's likely deductible. Some common ones include:
Office supplies & equipment
Marketing & advertising costs
Software subscriptions
Professional services (accountants, financial advisors, etc.)
6. Vehicle Expenses
If you use your car for business purposes, you can deduct mileage (67 cents per mile in 2024) or actual expenses like gas, maintenance, and insurance. Keeping a detailed log is essential to maximize this deduction.
7. Education & Professional Development
Courses, certifications, and even books related to your profession can be deducted if they help maintain or improve your skills.
8. Business Travel & Meals
Travel expenses—like airfare, lodging, and transportation—are deductible if they're work-related. For meals, 50% of the cost can usually be deducted when dining with clients or during business trips.
Final Thoughts
Tax deductions can make a big difference in how much you owe, but navigating them requires careful planning. Keeping organized records and working with a tax professional can help you maximize savings and avoid costly mistakes.
Need help optimizing your tax strategy as a self-employed professional? Let's chat! Head over to our website and book a free initial phone call with one of our advisors.
Ed Leach, CFP®, MBA, CEPA, is a Partner and Wealth Advisor at HIGHLAND Financial Advisors, LLC in Wayne, NJ, and works directly with clients advising them on their financial planning and investments. Ed’s work focuses on the unique needs of business owners, helping them extract value from their businesses while creating efficiencies in their business and personal financial plans. He is also a member of NAPFA, which is dedicated to serving fee-only advisors.