In December of 2010, the government passed a temporary tax relief act which, among other things, reduces the taxes paid for self-employment by 2%, reducing it to 13.3% (12.4% going to social security, and 2.9% to Medicare) until the end of 2012. While the reduction may not continue past that point, now is a good time to take advantage of self-employment opportunities. In addition, it’s important to note that fully half of self-employment taxes affect only the net income (income after deductions).

Some other important tax deductions to utilize when working for yourself are:

Internet Access- Home or (rarely these days) internet cafe internet fees can be deducted. Note that this doesn’t include drinks paid to work in a coffee shop. Also, if the access charge is a monthly home bill, calculate only the portion of time spent for business.

Phone Charges- Again, for a cell or single-line phone, only deduct based on business use. If a separate business line is used, that line may be completely deducted.

Home Office- Probably the biggest-and complicated- deduction available is for the maintenance and use of a personal office space. A portion of rent or property tax may be assessed for space that is used “exclusively for business”. It is worth initially consulting a certified personal accountant on this deduction, it may also include utilities, office furniture, depreciation of the furniture, and maintenance costs.

Office Supplies- General office supplies used for business, and all postage for promotion or work submission (such as for writers or transcriptionists) are allowed. This deduction covers printing and copying fees, and ink refills for home publishing/printing.

Travel- A boon for contractors and service businesses, travel costs to and from temporary work locations (or from site to site) can be written off. All business travel for those working from home is deductible.

General Business Fees- Licensi