Can I deduct retirement contributions as a freelancer?

Yes, absolutely! As a freelancer (1099 worker), you can often deduct retirement contributions, potentially significantly lowering your tax bill. Here's a breakdown:

* **SEP IRA:** This is *very* popular for freelancers. You can contribute up to **20% of your net self-employment income**, with a 2024 maximum of $69,000. Example: If your net self-employment income is $50,000, you could contribute up to $10,000. This is a *pre-tax* deduction, meaning it reduces your Adjusted Gross Income (AGI).

* **Solo 401(k):** Offers higher contribution limits than a SEP IRA. You act as both the employee *and* the employer.

* **Employee Contribution:** Up to $23,000 in 2024 (or $30,500 if age 50+).

* **Employer Contribution:** Up to 25% of your net self-employment income.

* **Combined Max (2024):** $69,000. This can be a powerful way to save.

* **SIMPLE IRA:** Less common for solo practitioners, but available. Contribution limits are lower than SEP or Solo 401(k). (Employee: $16,000 in 2024, Employer must match up to 3%).

* **Traditional IRA (with potential deduction):** You *may* be able to deduct contributions even if you also contribute to a SEP IRA or Solo 401(k), but it depends on your income and whether you (or your spouse) are covered by a retirement plan at work.

* **Deduction Claimed "Above the Line":** These retirement contributions are adjusted gross income (AGI) deductions, meaning you take the deduction *before* calculating your AGI. This is beneficial as it reduces the income subject to tax.

**Important Considerations:**

* **Net Self-Employment Income:** The base for calculating contributions is your *net* income after business expenses.

* **Contribution Deadlines:** Typically, SEP IRA contributions are due by the tax filing deadline (including extensions). Solo 401(k) deadlines vary depending on the plan.

* **Form(s) Used:** You'll report these deductions on Schedule C (Profit or Loss From Business) and Form 8606 (Non-deductible IRAs).

⚠️ Disclaimer: This is for educational purposes only. Always consult a licensed CPA for personalized advice.