Author Topic: If you are self employed, is their a way to invest pre tax dollars?  (Read 2321 times)

greenmimama

  • Pencil Stache
  • ****
  • Posts: 718
Title says it all, We would like to start a new bushiness, but still keep investing for our future. I was hoping we could glean from your wisdom.

Thank you.

MissStache

  • Pencil Stache
  • ****
  • Posts: 710
  • Age: 36
  • Location: Washington, DC
Re: If you are self employed, is their a way to invest pre tax dollars?
« Reply #1 on: April 14, 2014, 02:24:48 PM »
I was just thinking about the same question.  Hope someone has some good advice!

MissStache

  • Pencil Stache
  • ****
  • Posts: 710
  • Age: 36
  • Location: Washington, DC
Re: If you are self employed, is their a way to invest pre tax dollars?
« Reply #2 on: April 15, 2014, 06:47:50 AM »
Wow, that is an amazingly helpful thread!  Thanks so much, Knaak!

MayDay

  • Magnum Stache
  • ******
  • Posts: 3947
Re: If you are self employed, is their a way to invest pre tax dollars?
« Reply #3 on: April 15, 2014, 10:23:07 AM »
Related question (maybe I should start my own thread, but i feel like this is such a simple thing that it doesn't deserve it):  as a SAHM what can I do separately from my husband's 401k with the goal of reducing taxable income?

So far we have been maxing my Roth.  Looks like I could switch that to a regular IRA so that it is tax deductible.  Thats only 5K a year (not a concern now as we aren't maxing his 401K yet, but hope to get there soon). 

Looks like I can't do an individual 401K unless I am working PT.  I do work PT but it is under the table (I do occasional yard work for little old ladies).  I could report the income and then put it all in a 401K so I still wouldn't pay taxes, but it doesn't seem worth the hassle for a few hundred bucks a year. 

Am I missing anything?

electriceagle

  • Bristles
  • ***
  • Posts: 473
Re: If you are self employed, is their a way to invest pre tax dollars?
« Reply #4 on: April 15, 2014, 10:29:30 AM »
Pre-tax savings for the self-employed are better than those for the externally employed.

If you don't mind the paperwork, I believe that the Solo 401k may allow you to shield up to ~50k from taxes per year.

greenmimama

  • Pencil Stache
  • ****
  • Posts: 718
Re: If you are self employed, is their a way to invest pre tax dollars?
« Reply #5 on: April 15, 2014, 12:18:31 PM »
Thank you all, I knew you guys would know the answer.

Well we won't need to shelter 50k, but hey, you never know :)


Catbert

  • Handlebar Stache
  • *****
  • Posts: 1686
  • Location: Southern California
Re: If you are self employed, is their a way to invest pre tax dollars?
« Reply #6 on: April 15, 2014, 01:08:03 PM »
MayDay - Really nothing but traditional IRA is practical in your situation.  If you declared the "income" on your taxes then you'd pay SS and Medicare taxes on it (~15%), plus income tax.