Shaving $400 Of So Off My Tax Bill

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RusticBohemian
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Joined: Sun Jan 22, 2012 4:33 pm
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Post by RusticBohemian » Thu Feb 02, 2012 3:38 am

Hey guys.
It's tax time, and I owe the federal government roughly $400 in taxes.
I quit my job in 2010 and 2011 was my first year working for myself.
Because I'm currently ramping up income, I haven't gotten around to making any retirement contributions, which will reduce my tax bill, but I've got a few months before the deadline. '
I've currently got a Roth Ira with Vanguard and a 401k from my old place of work I can no longer make contributions to.
I'd ideally like to stay with vanguard to keep accounts simplified.
So I'd like to hear your suggestions for the best tax deductible retirement investment vehicles for a newly self employed person.
I hear a lot about solo 401ks and other choices employed people don't use.
One other related question.
Can anyone tell me on what form of my tax return I would note 401k contributions? I see where I note IRA contributions, but see nothing about 401ks.
Thanks.


RusticBohemian
Posts: 13
Joined: Sun Jan 22, 2012 4:33 pm
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Post by RusticBohemian » Thu Feb 02, 2012 5:06 am

I just realized that the money I owe is not for income taxes, but self employment taxes.
So the retirement savers credit gained though a post-tax IRA contribution won't reduce my bill further.
However, does anyone know if some sort of 401k using pretax dollars would work?
Thanks.


Chris
Posts: 651
Joined: Thu Jul 22, 2010 2:44 pm

Post by Chris » Thu Feb 02, 2012 11:00 pm

You'll want to look at form 1040 line 28, contributions to SEP, SIMPLE, etc. As you know, you can make a contribution now that will apply to tax year 2011, but do some research first; there are limits on the amount you can contribute. I can testify that SEP IRAs are simple to set up, and you can have a SEP IRA in addition to a Roth and a 401k.
The other area you should scrutinize is business expenses. Did you remember everything? The travel you did, PO box, any fees you needed to pay setting up the business...


Hoplite
Posts: 489
Joined: Sat Dec 04, 2010 1:03 am

Post by Hoplite » Thu Feb 02, 2012 11:15 pm

One thing to note about solo 401ks, and that is that the deadline for setting up the account, as opposed to funding it, is Dec. 31 of the tax year (at least that is my understanding), so this may not be an option for 2011. SEPs, however, can be set up and funded as late as Oct. (with a filing extension).


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