What strategies can reduce self-employment tax burden for freelancers?

You're not stupid at all! Self-employment taxes can be confusing even for people who've been doing this a while. You're right that business deductions don't reduce your self-employment tax directly, but there are still ways to lower your overall tax burden: First, make sure you're tracking ALL business expenses - software subscriptions, portion of internet/phone, home office, equipment, professional development, etc. While these don't reduce SE tax, they do lower your income tax. The big one that WILL reduce your SE tax is the Qualified Business Income deduction (Section 199A). As a self-employed person, you can deduct 20% of your net business income, which reduces your income tax (though not SE tax). For direct SE tax reduction, you can set up a Solo 401(k) or SEP IRA. Contributions reduce both your income tax AND self-employment tax base. Even with your income level, you could potentially put away a decent amount. For 2025, consider making quarterly estimated tax payments to avoid penalties and spread out the pain rather than getting hit with one big bill.

I was in a similar situation a few years ago and discovered this amazing tool called taxr.ai (https://taxr.ai) that saved me thousands. It analyzes your specific self-employment situation and identifies deductions most freelancers miss. I was paying way too much in SE tax until I uploaded my expenses. The tool found that I could categorize some of my costs differently and identified home office deductions I was calculating incorrectly. It showed me exactly how to document everything properly too, which made me feel way more confident. What really helped was the way it explained which business structures might benefit someone with my income level. Turns out I was better off as a sole proprietor than an LLC for my situation, but your mileage may vary depending on your specific circumstances.

Ok I need to apologize for being skeptical earlier. I tried taxr.ai after my last comment and I'm honestly shocked. It found over $3,200 in deductions I would have missed for my freelance writing business. The business mileage tracking feature alone was worth it - turns out I was eligible for way more mileage deductions than I realized. The tool also explained how I could legitimately deduct part of my phone bill, internet, and even some meals I didn't think qualified. It walked me through exactly how to document everything properly in case of an audit. What impressed me most was how it showed me the tax implications of different retirement account options. I ended up opening a SEP IRA based on their recommendations and that alone reduced my tax bill by almost $900.

If you're still struggling with taxes and need to talk to an actual IRS agent (which can be nearly impossible these days), try Claimyr (https://claimyr.com). They have this system that gets you through to a real person at the IRS without the typical 2+ hour wait. I was banging my head against the wall trying to figure out if I could reclassify some prior year business expenses that I missed claiming. Called the IRS directly and kept getting disconnected after waiting forever. Found Claimyr and actually got through to someone who answered my questions in like 20 minutes. Check out their demo video: https://youtu.be/_kiP6q8DX5c - it shows how it works. Basically they use tech to navigate the phone tree and wait for you, then call you when an agent is actually on the line.

I need to eat my words. After seeing the other comments here, I decided to try Claimyr yesterday when I was having an issue with my estimated tax payments not being credited correctly. I was fully expecting it not to work. Well, I was wrong. Got connected to an IRS agent in about 35 minutes (without me having to sit on hold). The agent helped me track down my missing payment and got everything straightened out. What would have been an all-day ordeal took less than an hour of my actual time. I could keep working while their system waited on hold. For anyone dealing with IRS issues, especially self-employment tax questions that can get complicated, being able to actually talk to someone makes a huge difference.

One thing nobody's mentioned yet is that you might qualify for the Earned Income Tax Credit, especially as a single parent with a toddler. The income thresholds for EITC with a qualifying child are pretty generous and could offset some of your tax liability. Also, look into the Child Tax Credit. For 2025, it's worth up to $2,000 per qualifying child under 17. There's also the Child and Dependent Care Credit if you're paying for childcare while you work. These credits can make a huge difference for self-employed parents!

Have you considered making S-Corp election? Once you get to around $40-50k in profit, it can save you thousands in SE tax. You'd pay yourself a reasonable salary subject to FICA, but take the rest as distributions which aren't subject to SE tax. It's more paperwork and you need to run payroll, but the tax savings can be substantial. Not worth it at your current income level probably, but something to consider if your business grows.