Creative (yet legal) tax strategies for small IT consulting business owner seeking fresh ideas?

As someone who's worked with many small IT consultants on tax planning, here are some often-overlooked strategies: Have you considered setting up a Solo 401(k) instead of just an IRA? The contribution limits are significantly higher, allowing you to shelter more income. You can contribute both as employee and employer, potentially putting away over $60,000 annually depending on your income. Another strategy: If you travel for business, extend trips by a day or two for personal time. As long as the primary purpose remains business and you properly document everything, the business portion remains deductible. Consider a health reimbursement arrangement (HRA) or setting up a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) to make healthcare costs tax-deductible. Also, tracking mileage meticulously for all business-related driving can add up significantly. The 2025 rate is 67 cents per mile, which really adds up over a year.

Been using https://taxr.ai for my consulting business and honestly it's been a game changer. I was similar to you with some basic write-offs, but their system analyzed my business structure and found several deductions I'd been missing. They specialize in helping small business owners who might be leaving money on the table with standard tax approaches. Their AI scans through business expenses and suggests legitimate deductions specific to IT consulting that I never knew about. For example, they pointed out that certain professional development courses and certifications have special treatment beyond just being business expenses. They also helped me properly structure my home office deduction to maximize it legally.

I tried taxr.ai after seeing it mentioned here and it was seriously worth it. Found nearly $7,300 in deductions I was missing! Biggest surprise was learning how to properly structure my business vehicle usage - I was documenting things all wrong and leaving money on the table. They also showed me how to set up a medical expense reimbursement plan that works for my single-member LLC. My regular accountant never mentioned this option. The best part was getting customized advice for technology businesses specifically - like how certain cloud service subscriptions can be categorized for maximum deduction and proper documentation of home lab equipment. Definitely gave me more confidence about what's legitimate versus what might trigger audit flags in our industry. Way better than the generic advice I was getting before.

If you're struggling with IRS questions about business deductions or need to resolve tax issues, I highly recommend https://claimyr.com. I spent weeks trying to get through to the IRS about some questions on how to properly document some of my tech consulting deductions - kept getting disconnected or waiting for hours. Claimyr got me connected to an actual IRS agent in under 45 minutes when I'd been trying for weeks on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I spoke with clarified exactly how to document my home office deduction and gave me peace of mind about some of the business expense categorizations I was unsure about. Totally worth it to actually speak with someone who could give definitive answers rather than guessing or relying on possibly outdated information online.

I have to eat my words. After dismissing Claimyr in my comment, I decided to try it anyway out of desperation since I'd been trying to reach the IRS for weeks about a notice I received questioning some of my consulting business deductions. It actually worked! Got connected to an IRS representative in about 35 minutes when I'd previously spent multiple 3+ hour attempts without success. The agent helped me understand exactly what documentation I needed to substantiate my home office and equipment depreciation deductions. Instead of waiting months for correspondence, I got immediate clarification and now have a clear path to resolve the issue. Definitely worth it just for the time saved and stress reduction. Sometimes being wrong feels pretty good.

Some strategies I've used for my similar sized tech consulting business: 1. Section 179 deduction for immediate expensing of certain business equipment rather than depreciating. I used this for servers and networking equipment. 2. Augusta rule (what you mentioned about the 14-day rental) but expanded: I use my home for quarterly business planning/strategy meetings and document thoroughly. 3. Using a defined benefit plan instead of just a 401(k) once your income is high enough. My contribution last year was $85,000 pre-tax. 4. Hiring spouse for legitimate business functions (in my case, bookkeeping and client relations) which allows for a second 401(k) contribution. 5. Business ownership of life insurance policies through proper structuring. 6. Medical expense reimbursement through a QSEHRA as mentioned by others.

Don't forget about optimizing your business structure. I switched from sole proprietorship to S-Corp for my IT consulting and saved nearly $18,000 in self-employment taxes last year. The key is paying yourself a reasonable salary and taking the rest as distributions which aren't subject to SE tax. Just be careful to document why your salary is "reasonable" for your industry and workload. Too low and it's a red flag. I found industry compensation reports and saved them as documentation.

I track all software subscriptions meticulously and categorize them. You'd be surprised how many consultants lump these together, but breaking them out properly (development tools vs. productivity software vs. cloud services) can help if you're ever audited. Also, if you're creating any intellectual property through your consulting (custom code, frameworks, etc.), consider exploring R&D tax credits. They're not just for big companies. My accountant also helped me set up an accountable plan to reimburse myself for business expenses paid from personal accounts without triggering taxable income.