Claim home office expenses.
The rules have been eased beginning this year, broadening the definition of a principle place of business. You generally can deduct expenses related to a home office if:
- you use the office either exclusively on a regular basis as your principle place of business or as a place patients, clients or customers use in meeting or dealing with you, or
- you use it for administrative or management activities of your business and have no other fixed location to perform such actives. (Note that if you are an employee, you can deduct home office expenses only if the business use is for the convenience of your employer.)
Benefit from self-employment tax deductions.
You can deduct above the line half of the self-employment tax you pay on you self-employment.
Look at self-employed health insurance costs.
If you are self-employed, you can deduct 60% of your health insurance costs for yourself, your spouse and your dependents. This above-the-line deduction is limited to the income you’ve earned from your trade or business. You can deduct the remaining portion as a medical expense under itemized deductions. This allowance is scheduled to increase until it reaches 100% in 2003.
Contribute to an MSA.
If you are self-employed, you may be able to establish a Medical Savings Account (MSA), which is used to pay medical expenses in conjunction with high-deductible insurance. You can take an above-the-line deduction for contributions to an MSA.
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