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