I earned around $100k on 1099 last year. What are my best options to save taxes on this income ?

Question

I have made sure that I am not going to pay penalty.

Answer 1

Since you are self-employed, you should consider setting up a SEP retirement plan. You can get large tax deductions while putting money away for retirement. You can still make a contribution for 2006.

You will also be able to deduct health insurance premiums in full on your federal tax return.

http://www.irs.gov/retirement/article/0,,id=137847,00.html

Answer 2

Are you a sole proprietor? Do you have employees? Do you and your spouse, if any, have income from wages and participate in a retirement plan?

If you are a sole proprietor, you could look into establishing a SEP-IRA for yourself and funding it by April 17, 2007. You can defer more this way than with a traditional IRA.

You can open up and fund a spousal IRA if you have a spouse who is qualified.

Study the Instructions to Schedule C and plan for next year, as well as noting your allowable deductions.

Then, go to a tax professional who can do the best for you and guide you for next year.

Answer 3

Keep track of your expenses/deductions. It is amazing how many things are forgotten and these little things can really add up.

Keep track of your "non-commuting" mileage - keep a small pad of paper in the car and record your miles. Expenses such as office supplies, postage, gas, advertising & meals can add up.

At the beginning of each year I get a large manilla envelop and put all my receipts for tax items in it. This includes a copy of the check for property taxes reciepts for charitable donations. When it is time for the tax return I don't have to hunt for stuff.

Another suggestion is to keep track of expenses using something like "Quicken." It is easy to use and it can save you hours of work. I have used it for years.

Answer 4

Do you own any property or started a small biz. I bought into a little cosmetics biz on the side like Mary Kay. I was able to catch all kind of breaks. I was even able to file half my cell phone bill. I wrote off the products I bought gas to meetings luches just because I mention the product biz cards gas stationary. Get a small biz that you count as a lost or buy flipper houses.

Answer 5

See a good financial advisor. A good one has access to an attorney, tax experts, cpa's, etc.

Some charge a fee, some don't .
Suggest you see a bank manager and ask him about what his bank can do for you.

You need more than the Yahoo! board.

Good luck.

Answer 6

Talk to a CPA about your specific situation, a good CPA should cost you less than you could otherwise owe to the IRS if trying to find all the loopholes on your own.

Answer 7

make a donation to meeeeeeeeeeeeeeeeeeeeeeeeee.