Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 01-30-2007, 11:05 AM
Junior Member
 
Join Date: Jan 2007
Posts: 5
Unhappy Tax savings strategy for self-employed IT consultant

Dear TaxGuru,

Thank you for your previous replies, I really appreciate your advise. Now, for the most important advice to me, can you suggest some ideas for saving taxes for for my situation as follows;

I am an IT consultant making over $120,000 as an independent consultant. I work in new jersey and travel to NY city. As such, I am struggling to find expenses, all I have is travel expenses to NY, my meal expenses, and everything is provided by my client in NY.

I was told by my accountant that I would have to pay over $30,000 in taxes not including interest and penalties. I have not paid the estimated taxes yet. I am married with 2 kids and I have a high mortgage and taxes per month of $3,200 per month. Where can I pay these taxes??

Please help and I will be most grateful to you!



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 01-31-2007, 01:44 AM
TaxGuru's Avatar
Tax Guru
 
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,399
Blog Entries: 3
Well, awkan, nice to hear from you again!

In fact, this is very common problem amongst IT consultants. I have had new clients come to my office and ask me the same questions.

Well, the bad news is that today, in 2007, no CPA is going to take aggressive strategies to minimize your tax liability unless you can substantiate these expenses. You have to maintain a good bookkeeping system to track your income and expenses.

Remember everybody who earns pays taxes, you should be aware of that. You should have consulted a CPA Regularly, at least 2-3 times a year to allow him to understand your situation and to alert you of your potential tax liability.

Having said that, here is a typical list of expenses that are deductible;

1. Travel expense to NY
2. Parking your vehicle at NJ train station.
3. Your cell phone charges if you use it to communicate with your clients, or your employer.
4. Your monthly bank charges.
5. Your Lap at home could be deductible provided you use it for business purposes.
6. Any education expense/seminar expense to maintain your professional skill set.
7.Your DSL/Cable internet may be deductible if you use internet for business purposes.
8.Any office supplies, stationary you may use for business.
9.Its not too late to set up a pension plan. Contact a financial planner/investment rep and try and open a SEP plan, you may be able to shelter up to 25% of your net income. But, please check with the appropriate pension planner to determine if you still qualify.

Note that the pension contribution will not prevent the S/E Tax hitting you. The pension deduction is taken as an adjustment to income and not deductible on schedule C.

I hope that this helps a little, another suggestion, if cannot lower the tax liability, arrange for an installment agreement and going forward have your accountant/cpa set you up with quarterly payments.

Good Luck...

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.

Last edited by TaxGuru : 01-30-2009 at 10:15 PM.


Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply


Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning