hi,
Iam a partner at a group practice and contribute max (15,000)to 401k and also take part inthe profit sharing. i also work as a independent contracter at a second job can i
1. save for retirement with either a sep/simpleor solo 401k with the income from the 2nd job.
2.can i use the self employed deductions such as milage,electronic item purchases etc from the income of the second job
nandeesh

Zip Code: 95355

If you are partners is a group practice, and then earn some additional income on the side, you should be allowed to set up and contribute to a retirement plan based on your self-employment income - even if you are covered under a retirement plan through the group.

There is an exception if you were to own 100% of the group practice. In that case, since you would control two entities, they would be considered one entity for employee benefit and retirement plan purposes. (Actually, I believe the rules changed this year and if you own more than 50% of two entities, they are seen as having common ownership for this purpose.)

Another possible pitfall exists depending on the type of entity the group is. If the group practice is a partnership or LLC, and you're putting away the maximum allowable $44k through the group's retirement plan, you might not be able to put away any additional money based on your self-employment income. You might want to ask the retirement plan consultants your practice uses about this.

Let's say the group practice is a corporation. You indicated that you're covered under a 401k plan through the group practice, and will be maxing out your $15k in salary deferrals. Because of that, you won't be able to take advantage of a Solo 401k or SIMPLE plan this year, since both of these plans utilize salary deferrals, and you already hit the $15k max.

You can set up a SEP and contribute up to 20% of your net self-employment income. You have until the due date of your tax return, including extensions, to establish and fund a SEP.

You also ask about deducting your unreimbursed professional expenses against your self-employment income. You're definately allowed to do that. Any expense that is both ordinary and necessary in connection with that income is allowable. Check out the list of professional expenses commonly incurred by young healthcare professional available on our home page, www.mdtaxes.com.

Zip Code: 01801