"Working Expenses"

[Edsel]

Computer Geek quits job. Goes to work at the same company as a "consultant," and begins to develop other customers, billing them an hourly rate for his time.

I do not see this as a tax advantage, unless he can deduct expenses that otherwise would not be deductible. We're not talking about someone with facility expenses, operational expenses, overhead, and other "ordinary and necessary" expenses.

He is now approaching April 15, having no tax withheld, and having to compute BOTH ENDS of social security (except to the extent he can find deductions). He can't even deduct the mileage to his principal customer.

What are some examples of expenses that he might be in a position to deduct? I can think of a few (but very few), but would rather hear other ideas than just mine.

[taxea]

He is a sole proprietor and can take any expenses to run the business that are listed in Sch C instructions. If he has none, he has none... what about home office, office supplies, depreciation on his car, or expenses for his car, and on and on

[BP.]

What are some examples of expenses that he might be in a position to deduct? I can think of a few (but very few), but would rather hear other ideas than just mine.

Not deductible expenses in terms of Schedule C items (rather, these adjust on 1040 p. 1), but how about health ins premiums, HSA contribs & SE SEP?

[erchess]

Again not Sch C but

does the client file a Sch A and if so is he in a position to make a contribution for Haitian Relief? Furthermore if he's going to file an A make sure you pick his brain about all potential deductions even the ones he doesn't normally take advantage of.

Furthermore what kind of tax deferred pension does the guy have and if he has not contributed the max already, is he in a position to contribute more?

[Dusty2004]

Home Office

If they do work in their home (Schedule appointments, call customers, create bills, etc) they may be able to use home office expenses. Also, if he does have a home office, he may be able to claim his mileage from home to his first client.

Dusty

[Lion]

Tool

Did he buy tools or software or subscriptions to access client computers remotely or take a seminar or print business cards or...? Have him go through his check register and credit statements and cash receipts to highlight all his business-related expenses. Long distance telephone calls? Buy a fax for home biz use? Any new computer equipment used for business? Convert his personal computers and peripherals to business use? OIH? Mileage, whatever fits his facts and circumstances?

[Edsel]

Thank You

Good ideas from the respondants. Thank You.

Edsel Ford