Definition

Employees split Social Security and Medicare taxes with their employer; the self-employed pay both halves, totaling 15.3% on net earnings up to the Social Security wage cap (Medicare continues above it). You can deduct half of it from income. Retirement-plan and other business deductions reduce the net earnings this tax is calculated on.

1. Self-Employed Tax Deductions: What You Can Write Off and How

   Self-employment comes with a higher tax burden — but also more legitimate deductions than W-2 employees ever access. Here is a comprehensive guide to what you can deduct and how to document it.
   tax

1. Tax Deduction

   An expense that lowers the income you are taxed on.
2. Adjusted Gross Income (AGI)

   Your total income minus specific adjustments, used as a key tax reference figure.
3. ITIN (Individual Taxpayer Identification Number)

   A tax ID for people who must file U.S. taxes but are not eligible for a Social Security number.