If you make money as a work at home mom, now is the time to add “taxes” to your endless list of things to do. While you should always consult a qualified tax professional to guide you in your self-employed tax obligations, there are four critical money-moves you should make before year-end, to maximize your work at home mom tax benefits.
Invest in your golden years. When you are a stay at home working mom, retirement is one area where Uncle Sam is on your side, so use the benefit to your advantage. Self-employed individuals can establish either a simplified employee pension plan (called a SEP-IRA), to make retirement contributions up to 25% of self-employment net earnings, or a SIMPLE IRA Plan, which allows for contributions up to $11,500 of your 2011 self-employed net earnings. Research plans thoroughly to determine which will suit your needs best, but compared to a traditional IRA (which has a maximum contribution of $5,000 or $6,000 depending on your age), the tax benefits are worth the research. You should also confirm when you can contribute for the 2011 tax year; many IRA plans allow for contributions until April of 2012, while 401K and 403(b) plans usually require that eligible funds be invested by December 31st of this year.