First time self employed - what can be deducted? Therapy, bike, health?

You should get an accountant who can help you with this stuff. Mine found all sorts of deductions I wouldn't have known existed. Bonus: you can deduct your accountant's fees!

The IRS publishes all this information. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center is a starting point for finding out more about deductions. http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Deducting-Business-Expenses another. And http://www.irs.gov/pub/irs-pdf/p535.pdf is (pdf) Publication 535: Business Expenses. As a self-employed person with limited extra cash, it's worth perusing the information they provide for free. I think your ideas about acupuncture and counseling would not fall under the self-employed tax breaks, though. How does that contribute to you running a business? (That's the general question to ask yourself.) Also keep in mind that writing something down as an expense does not mean it wound up being free for you. It's just slightly cheaper. I use BlueCross BlueShield of Texas. Individual health insurance plans vary wildly depending on your ZIP code, current health, age, weight, and tobacco usage. But for a data point, I'm not overweight, I'm in my early 40s, my plan is about $250/month, and it has a $10,000 deductible before it covers anything, including prescription drugs and doctor visits.

For rental deduction, at least in prior years, I've made sure I had a room designated for work. Currently I have my loft space designated as my office. It accounts for roughly 27% of the floor plan, therefore I deduct 27% of water, sewage, electricity and heat. In addition, I deduct 27% of my cable and 27% of my internet bill (nature of work means cable gets to be deducted as well). I deduct 30% of my phone bill based on usage. I have a log book, whenever I meet with a client anywhere other than home, I mark the date, time, location, one way mileage, and return mileage. I am fortunate in that I have a CPA in the family and I was hooked up by knowing what and how to take things, as well as determining ahead of time whether it was more cost effective to depreciate my computer ahead of time or all at once. Note, my office is my office. For it to qualify it can't be used as anything other than an office. I am not currently in my office writing this and goofing off. My son never comes up here to watch dinosaur documentaries.

Your medical expenses are only tax deductible over a certain http://www.irs.gov/taxtopics/tc502.html. "For years beginning after December 31, 2012, you may deduct only the amount by which your total medical expenses exceed 10% of your adjusted gross income. " In other words, if your AGI is $50,000, and your medical expenses are $7,000, you could deduct $2,000, but if your medical expenses were only $4,500, you wouldn't be able to take any deduction for them. I really think you need an accountant. Nearly all of my self-employed friends get professional tax advice, but especially when you're considering taking deductions for big chunks of your life expenses, you're just asking to get audited, and you want to make sure that you're doing everything absolutely by the books.

Never been a full-time freelancer, but I unfortunately have navigated health insurance. I think most MeFites will agree that you should definitely have insurance. What state do you live in? Plans vary state to state. As for therapy, even "good" plans don't usually cover it, or they have weird restrictions, or like 5 doctors on the plan. Usually better to just pay out of pocket.

I agree with PhoB, you should look into an accountant/bookkeeper.

Also keep in mind that writing something down as an expense does not mean it wound up being free for you. It's just slightly cheaper. More specifically, let's say you made $20,000 in a year in self-employment money. You will pay taxes on that and also pay into your own social security, so it will seem like your taxes are higher than they would be if you were a regular employee. I usually rule-of-thumb estimate that I will pay 25% of my earnings to taxes. By the second year you are supposed to file estimated taxes and pay taxes quarterly. If you had, say, 5K worth of deductions, this would mean you'd be paying the taxes on only 15K. So even though you still had to pay for the computer or the health insurance or whatever, you wind up paying less in tax which ameliorates it a little but not entirely. I would get a book and/or an accountant to guide you through the first year. Keep receipts and very good records. I use TurboTax to file and it just asks you a bazillion questions which can be helpful. In answer to your specific questions. Therapy - unclear, but they are likely going to count as medical expenses. but you should read up on what that means and how that affects you specifically. Health - Googleable term is "catastrophic insurance" and this will vary a lot based on what state you are in Computer - this is a straightforward deduction usually and you can decide if you want ot let is depreciate over time or take it all as a one-time depreciation (again, read up on these terms if they don't make sense to you) Rent - home office deductions are very tricky, very very careful if you decide to go this way and make sure you understand the rules. Internet - I deduct a fraction of my home internet and you probably can too. Other things I'd pay attention to: phone bills, postage, mileage if you have to travel for work, meals/coffee with clients, that sort of thing. Website? Advertising? Professional memberships? It's a tricky area your first time around but you gradually get used to the routine and learning the ropes. Best of luck.

http://www.amazon.com/exec/obidos/ASIN/0307453669/metafilter-20/ref=nosim/ has a lot of good info for beginners. there are so many variables based on WHAT your work is. read the irs documents, get turbotax, etc. if you're providing a service and not going to carry an inventory of products that you're selling, it's pretty simple. things i deduct: office supplies, new computer when my old one died, taxi rides to in-house client meetings, web hosting for my work website, the money book for freelancers when i bought it, my business license; transit and hotel that one time i had to go to nyc for a fancy meeting things i do not deduct: home office crap (because my office is a desk in my living room and that does not count as an office to the irs); internet (too hard to say what is personal vs. work and i don't want to fight them on it if it ever comes down to it); phone (i make like 5 work phone calls a month, the rest is texting with friends, so meh) all of this will vary depending on what type of work you actually do.

Something to consider: if you have a choice about going freelance, it might not be the most propitious moment while you're depressed. Being freelance can be competitive – you need to be prepared to get out and hustle, and if you're not emotionally up to this you might not thrive.