Self-employment can come in many forms. Ranging from being an independent contractor, freelancer, small business owner, social media influencer, or simply creating an LLC that best fits your business module. Not all are equal or the same, but understanding the intricate routes one can take to further liberate themselves and their pockets from the burden of student loan debt could be life-changing. It takes a bold soul to venture out and create a business while rising education costs loom. You are the brave, the courageous, and often, the most inspirational of us. So we would like to present you with a few tips and helpful life hacks to aid you along your brazen journey.
- Self Employment Tax Deduction
Most new or first-time business owners aren’t even aware of the benefits or rights that they are now awarded for their self-employment status. According to Investopedia.com and further substantiated by irs.gov. This particular deduction refers to Social Security and Medicare, respectively. These, unfortunately, are taxes that self-employed entrepreneurs are obligated to pay. Although you have to pay for these, there is a reason why this deduction is on this list. Self-employment tax may cost you less in the grand scheme of capitalism. The main reason is that you are allowed to deduct up to half of your self-employment tax from your net income. Thus putting money back in your pocket to help bury student loan debt. According to the IRS, you can deduct the employer-equivalent portion of your self-employment tax in figuring out your adjusted gross income. This deduction only affects your income tax. It does not affect either your net earnings from self-employment or your self-employment tax.
If you file a Form 1040 or 1040-SR Schedule C, you may be eligible to claim the Earned Income Tax Credit (EITC)
I know we’ve all heard of this before, whether it be from different people or areas of life. Nevertheless, the importance and necessity of this skill can not be stressed enough. This will play an enormous role in your ability to pay off student loans. In fact, EducationData.Org reports that 43.0 million borrowers as of 2022 have student loan debt, and most individuals are not aware of the harm this roadblock carries. Budgeting will play a key factor in getting you out of this statistic. Consumer.gov advises writing down your monthly expenses and we here at TSLHG concur. Writing down your monthly budget gives you a visual perspective of not only how much you spend but also where you need to cut back. We love Netflix as much as everyone else, but if it can hasten your debt-free lifestyle it may pay off, in the long run, to whip out those primitive DVDs.
- Having Multiple Streams of Income
Attempting to repay student loan debt with one source of income is possible; given you’re employed within a field that has a salary well above the average gross income. That being said, most student loan debt holders may need a second, or even third stream of income to emerge victorious over the wallet-draining statistic. Luckily, we live in a time when freelance work is thriving. Digital platforms such as Uber eats, Fiver, Lyft, and Youtube, to name a few. Allow financial freedom seekers a path that didn’t even exist twenty years ago. Riester reports that as of 2022, on average depending on the time and location part-time Uber drivers make just over $600, including about $40 in tips per week.
The fight against student loan debt can be won! It may take time and savvy thinking. If you’re here reading this, you’ve already taken the first step. Remember, as a self-employed individual there are a ton of beneficial tax deductions and resources to help you in your repayment journey. To learn more about the numerous tax benefits for the self-employed, click here.