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Profitability in business depends on minimizing costs and maximizing resources, and tax deductions can certainly help. Here are several tax benefits that are available for the self-employed.

You can deduct half of your self-employment taxes paid on Medicare and Social Security from your net income. Essentially, the IRS treats the employer portion of the self-employment tax as a business expense, and allows for the appropriate deduction.

Home-office deductions can be complex. Basically, the cost of any workspace regularly and exclusively used for a business can be a home office expense. If your office occupies 15% of your home, then 15% of your annual electricity bill is tax deductible.

Internet and phone costs from a home office can be deducted. The key is to only deduct expenses related to the business. The entire cost of a second phone line that’s solely used for business counts.

If you are self-employed, pay your own health insurance premiums, and are ineligible for a plan through your spouse’s employer, you can deduct your health, dental and qualified long-term insurance premiums, plus the premiums used for your spouse and kids younger than 27.

Fifty percent of the cost of meals bought while traveling for business or entertaining a client is tax-deductible. Some entertainment costs are tax-deductible, but the IRS has rules restricting them.

Car expenses used for business are tax deductible, including the standard mileage rate or the actual expenses.

You can deduct costs on publications and subscriptions related to your business, as well as education expenses incurred to maintain or improve business skills.

But the best tax deduction for the self-employed may be contributions to retirement plans, like SEP-IRAs, SIMPLE IRAs and solo 401ks. They can reduce your current tax bill and build tax-deferred investment gains for later.

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