5 Tax Deductions Every Self-Employed Person Should Know About

Financial Horizons: Insights for Building Wealth and Securing Your Legacy

By Dr. Jose G. Cardenas, Chief Tax Strategist at The C & R Group, LLC

Here’s the truth:

When you’re self-employed, the IRS treats you like a business, whether you act like one or not.

If you just look at what hit your bank account and “guess” your taxes, you’ll almost always overpay—or get crushed by a surprise tax bill at the end of the year.

But when you understand the deductions available to you, you can legally reduce your tax bill, smooth out your cash flow, and start building real wealth instead of just covering invoices.

Let’s walk through 5 powerful tax deductions and credits self-employed people should have on their radar.

1. The Home Office Deduction

If you run your business from home—even part-time—you may qualify for the home office deduction.

To even be in the conversation, your workspace generally must be:

• Used regularly and exclusively for business, and
• Your principal place of business or where you conduct admin/management of your work.

If you qualify, you may be able to deduct a portion of:

• Rent or mortgage interest
• Property taxes
• Utilities
• Homeowners or renters insurance
• Certain repairs and maintenance

You can often choose between:

• A simplified method (flat rate per square foot), or
• A regular method based on actual expenses and business-use percentage.

This deduction is powerful—but it’s also commonly misunderstood. Get help before you claim it, so you take it confidently, not nervously.

2. Vehicle Expenses

If your vehicle is used for business, it’s not just a ride—it may be a deduction engine.

For business miles (not your normal commute), you may be able to deduct either:

• The standard mileage rate, or
• Actual expenses (fuel, maintenance, insurance, lease interest, etc.), allocated between business and personal use.

Examples of potential business use:

• Driving to client meetings
• Traveling between job sites
• Picking up supplies or equipment
• Certain travel to networking events or conferences

The key is documentation:

• Keep a mileage log (date, destination, purpose, miles).
• Track fuel and maintenance if you’re considering the actual-expense method.

No log = weak deduction. Strong log = stronger tax position.

3. Self-Employed Health Insurance Deduction

When you’re self-employed, you’re the HR department too—which usually means you’re buying your own health insurance.

The self-employed health insurance deduction can allow qualifying self-employed individuals to deduct premiums they pay for medical, dental, and sometimes long-term care insurance for themselves, their spouse, and dependents—up to certain limits and conditions.

A few important points:

• The plan is typically in your name or your business’s name.
• The deduction usually can’t exceed your net self-employment income.
• You can’t double-dip—if premiums are already being deducted somewhere else or paid pre-tax, you don’t deduct them again.

This deduction comes “above the line,” which means it can reduce your adjusted gross income, not just your itemized deductions. In plain English: it can be a big deal.

4. Personal and Dependent Care Credit

Being self-employed doesn’t just affect your time; it affects your family. If you’re paying for care so you can work or run your business, you may qualify for the child and dependent care credit (often referred to more casually as a personal and dependent care credit).

Examples of qualifying situations may include:

• Paying for daycare so you can meet clients or work your business
• After-school care, summer day camps, or similar arrangements
• Care for a qualifying disabled spouse or dependent so you can work

Unlike a deduction, this is a credit—which reduces your tax bill dollar for dollar, up to certain limits and percentages. The rules can be technical, but if care expenses are a real line item in your budget, it’s worth having a professional run the numbers.

Keep:

• Receipts from care providers
• Provider names, addresses, and tax ID numbers
• Records of dates and amounts paid

If you’re paying for care to free you up to work, you should at least know whether the tax code is willing to help.

5. Self-Employment Tax Deductions for Retirement Plans

One of the biggest shockers for new self-employed people is the self-employment tax—you’re paying both the employer and employee side of Social Security and Medicare.

The flip side? As a self-employed person, you often have more powerful retirement options than regular employees.

Depending on your income and structure, you may be able to use plans like:

• SEP IRA
• SIMPLE IRA
• Solo 401(k) or one-participant 401(k)

Contributions to these plans can:

• Be tax-deductible, reducing your taxable income
• Help offset the sting of self-employment tax
• Build serious retirement wealth over time

You might be able to put away much more than the standard IRA limit—if your cash flow and business profits allow it.

If you’re self-employed and not using a retirement plan, you’re likely missing one of your biggest available deductions.

The Bigger Picture: You’re Not Just Filing—You’re Running a Business

Most self-employed people think in terms of “getting their taxes done.” That’s the bare minimum.

The real win comes when you:

• Track your income and expenses throughout the year
• Use deductions and credits intentionally
• Build health insurance and retirement planning into your business model
• Work with a strategist who understands both tax law and real-world cash flow

You didn’t go self-employed just to give more money to the government. You did it for freedom, control, income, and impact. Your tax plan needs to match that.

Final Thoughts: Stop Playing Small With Your Self-Employed Taxes

If you’re self-employed—freelancer, consultant, contractor, coach, creator, solo practice, or small business owner—you’re already carrying more risk and responsibility than the average employee.

You deserve a tax plan that recognizes that.

By:

• Using the home office deduction correctly
• Capturing legitimate vehicle expenses
• Leveraging the self-employed health insurance deduction
• Exploring dependent care credits
• Funding tax-advantaged retirement plans

…you can keep more of what you earn and build a business that actually supports your long-term wealth and legacy.

You don’t have to figure this out alone—that’s what professionals are for.

🔗 Read more at: www.thecrgroupllc.com/blog

📅 Book your consultation: Book a consultation with Dr. Cardenas

About the Author

Dr. Jose G. Cardenas is a retired U.S. Army Finance Officer and the Chief Tax Strategist at The C & R Group, LLC. With a Doctorate in Business Administration and over 20 years of experience in financial strategy and tax planning, Dr. Cardenas helps self-employed individuals and business owners protect their wealth and build a legacy. Learn more at www.thecrgroupllc.com

📌 Disclosure

This article is for educational and informational purposes only and is not intended to serve as personalized legal, tax, or investment advice. Tax laws are complex and subject to change, and deductions and credits depend on your specific income, filing status, and business structure. You should consult with a qualified tax professional about your situation before making any decisions. Dr. Jose G. Cardenas, DBA, provides tax advisory services through The C & R Group, LLC. Insurance strategies, including Indexed Universal Life (IUL) and annuity products, may be offered through his role as a licensed financial professional affiliated with Experior Financial Group.

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