Austin freelance consultant. $89,420 in missed deductions found. Amended returns for 2 years. SEP-IRA contribution strategy implemented.
01The Situation
This Austin consultant earned $290K annually and had used the same tax preparer since year one, a generalist who filed the Schedule C without asking about his home office, vehicle, health insurance, or retirement account. Effective tax rate: 28.4%. In our first meeting, we identified $89K in annual deductions he had never claimed.
02What We Did
We identified 6 missed deduction categories, amended FY 2022 and FY 2023 returns recovering $22.4K in overpaid taxes, established a SEP-IRA with the maximum $18.2K contribution before the tax deadline, and documented home office and vehicle use in audit-ready format. Effective tax rate dropped from 28.4% to 23.2%.
Breakdown
| Deduction | Annual Amount | Prior Treatment | Annual Tax Saving | Status |
|---|---|---|---|---|
| SEP-IRA Contribution | $18,200 | Never set up | $4,550 | |
| Health Insurance Premiums | $14,400 | Personal itemized wrong | $3,600 additional | |
| Business Vehicle | $12,800 | Not claimed | $3,200 | |
| Home Office 280 sq ft | $8,400 | Not claimed | $2,100 | |
| Professional Development | $6,200 | Partially claimed | $1,550 | |
| Software and Tools | $4,820 | Mixed in personal | $1,205 | |
| TOTAL | $64,820 per year | All previously missed | $14,320 per year |
"My last preparer knew I worked from home and never mentioned this." The $14K annual saving compounds over time. The SEP-IRA means he is building retirement savings while reducing taxes simultaneously.
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