My gross pay for 2009 is going to end up right about $ 50K which would put me into the 25% federal tax bracket. Once you back out 401K and medical, my taxable wages are around $ 46,000. However, I am a “legitimate” telecommuting worker that works out of a home office for a company that is based in a different state. Here are the exemptions that I plan to use:
-portion of rent/utilities for home office
-portion of vehicle payment for work use
-portion of auto insurance
-50% of cellular phone bills
-student loan debt interest
I’m guessing these will effectively reduce my taxable income by around $ 8-10K. This leaves me with two questions…
1) Are there any exemptions that I am leaving out? I have not included anything that my work already reimburses me for (meals, etc).
2) I think I read somewhere that by having your taxable income below something like $ 34K it drops you from a 25% tax bracket to a 15% tax bracket and would save me thousands of dollars. If I am just shy of the next lowest tax bracket, is there anything that I can do within the next 3 days to reduce my taxable income? I considered doing a 100% 401K contribution for my paycheck on the 30th but it had already been processed for payment.
Thank you for any suggestions! And by the way, I am not trying to do ANYTHING ILLEGAL! I just want to make the best use of my LEGITIMATE exemptions to save as much money as possible on taxes.
Thanks for the clarification on how the brackets work, I was obviously way off on that. As far as what I mean by a telecommuter, I am a sales rep for a company that is headquartered elsewhere in the country. I work from a home office to cover a large region of the northeastern United States. I will review the document you provided to make sure I’m counting everything, and it’s obvious that I need to pay a professional to sit down with me, I just want to have my ducks in a row going into this. Thanks again!