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Tax Advice?

I saved $30,000 this year after taxes. I paid $10,000 in taxes. I need to get rid of the $30,000 in my bank account before Dec 31st so I can get most of the $10,000 back when I get my refund.

What is the safest/quickest way I can write-off the $30,000? I need to be able to get this money back next year and use it for a down payment on a house.

OK, I think what we have here is a little confusion on US tax law. Let me try to clear it up.

The federal government doesn't tax possessions...they don't tax what you have in the bank...they don't tax savings. What they tax is income...new money....money earned that you didn't have before. If you saved money and put it in a bank, that is great. The IRS won't tax it. It has already been taxed when you earned it (from your W-2). It is yours to keep forever and do with whatever you want. If you earn interest on it, then the int erst (and only the interest) becomes taxable. In fact, you don't lose all the interest, only a percentage. That percentage is based on how much your total income is and your filing status (married, single, etc.)

Now, you say you "paid" $10,000 in taxes and want it back. Can we assume you "withheld" the money (from your paycheck) or did you make an estimated payment (1040-ES)? Or, are you talking about something other than federal income tax? If you did have $10,000 withheld, when you file your tax return next year, you'll get back a refund of what you over paid. Taking the $30,000 into or out of your bank account won't change your refund at all.

Hope this clears things up.

(Addendum: OK. I think I may see what is happening. You are running a business and profited $45,000 after writing off all expenses AND you want to "shelter" that profit by investing it in a bank or something. Sorry. The only way to lower your profit is to have actual business expenses. Putting profit into savings isn't a business expense. Are you really sure you want to have no profit? People start businesses to eventually have a profit. If you never have a profit, why spend all your time in a business. The only downside to a profit is paying taxes on PART of that profit. Be thankful your business generated a profit.....many don't. I'm sure there are tons of illegal accounting tricks to prevent taxation, but do you want to always live with the thought of the IRS catching up to you and putting you in jail? Remember Al Capone?

You could legally shelter some of the profits by putting money into a tax deferred retirement plan like a SIMPLE, SEP, or such. Please talk to a professional about which is best. Keep in mind, once you fund these retirement plans, you can't touch the money until retirement. If you take it out early, you have to pay penalites and taxes....it just isn't worth it. So, if you want to buy a house next year, you are probably best off paying the taxes and calling it a day.

You may have gotten better answers if you originally said, "My self-employment generated $45,000 in net profit. What can I do to reduce my tax liability?"

I believe that is called tax fraud.

It's possible that you won't need the house as Uncle Sam may be paying your room and board for a few years. Of course, you won't have a choice of roommates.
You are why I have to pay a bundle of taxes, so don't ask me.
I forwarded your question to the IRS, by the way.
Bundle it up in non-sequential 20's and get it to me. If you can find me next year, I'll give it back.
Buy a house and pay as much possible in interest payments before 1/1/07 Have any outstanding medical/surgeries done this year. Try IRA

Other than that you cant just write off 30k...
You can invest it for opening a new busines, when u are self employed you can claim losses for the first 2 years.
It sounds like what you're really asking is, "Where can I invest my money now that I can then pull out the $10,000 I need on April 15th?"

The answer is to split the money into two investments. Take the $10,000 you need to pay your taxes and invest this in a CD that matures on or about April 5th. Take the $20,000 profit and invest wherever you like for the best mid-range gains. Since you want to be able to access it for a downpayment on a house, you'll need a "safe" investment so that you can pull the money out once you've saved enough.

Seek your advice from a professional investment advisor or your bank for what will be safe. That way, you have recourse if the advice is wrong - you don't have recourse if you take the advice from unlicensed persons online.