Retirement Deductions for the Self-Employed

There are tax deductions for self-employed individuals that allow you to make contributions towards a retirement plan of your choice. Below are a few different plans to consider that are all tax deductible.


This plan allows for 20 percent maximum of your net income if you are self-employed or a dollar limit of $49,000. The benefits to this plan are that the investments grow tax deferred and the contributions are completely deductible. If you make a withdrawal though before you are 59.5 years old, you will receive a penalty of 10 percent.

Solo 401 (k)

You can contribute up to $16,500 as of 2010 towards your 401 (k) and if you are over 50 years old you can contribute up to $22,000. Then, there is a matching portion as well to this plan. That part can go up to 20 percent of your next income for the year.

Simple IRAs

There is a maximum salary contribution of $11,500 as well as a matching contribution. The contribution can be up to 2 percent of the net income.

Claiming Tax Deductions

In order to claim these tax deductions as a self-employed individual, you will need to use Schedule C or F. It is important to look into the deadlines for each plan and have it set up in time to claim it.

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