Maximize Your Tax Deductions
One way to save more money for retirement is to give less of it back to Uncle Sam. Remember, all three of the most common self-employment retirement plans — solo 401(k), SEP IRA and SIMPLE IRA — are pretax plans. That means that every cent you save for retirement is deducted from your taxable income. In fact, contributions to retirement plans are the No. 1 tax deduction for self-employed business owners [source: TurboTax].
Pay attention to the contribution limits that we talked about earlier. If you have enough income to put the maximum away, you can personally deduct up to $51,000 with both an SEP IRA and a solo 401(k). But with an SEP, you can also deduct the contributions you make to employee accounts up to an additional $51,000 each. The limit for a SIMPLE plan is considerably lower at $12,000 for employees under 50, but if you have employees you can also deduct any contributions you make on their behalf.
Finance Planning Tips
Here are some tips to help you with generating income and planning for the future.
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