A good friend of mine owns a Jani-King cleaning franchise and my wife has been employed by him for a couple of years. Starting last year my wife started doing it full-time. I have a couple of questions…

1. We have received about ,000.00 in income during 2007 and have not paid any taxes on that income. What kind of percentage of that income can we expect to pay?

2. Her boss provides all of the supplies, however we use one of our personal vehicle to go from job site to job site. I know she drives approximately 250 miles each week. Can we deduct the mileage as business expense as long as we know what the daily amount is (we have kept track).

3. Should I look at any other deductions?

I know there will be people that will say that we need to speak to an accountant, and we intend to. I am just looking for a little education before we meet with one.

Any assistance is greatly appreciated.
I should have clarified the section about my income. I work for an employer (city government) and our total household income was about 53K including the 12K we made as a contractor.

We’ve used the same tax preparer for many years. Nothing fancy, one of the big name franchise’s. Without any major deductions or audit flags we’ve been selected for an IRS audit. My wife and I are both W-2 workers and collectively earn just under 0K/yr, claim standard deductions (mortgage interest, kids (no EIC), nominal business expenses — less than 00/yr for business supplies, lunches, etc… and some mileage for business travel in a car that I own, (less than 10K miles per year and I’m in B2B sales), no investment losses or non-standard or "creative" deductions). Just seems so odd that we’d be selected for an audit. Is my tax preparer accountable to me for this audit? Is selection totally arbitrary or, are certain flags looked for?
Appreciate all the feedback. Yes, business expenses are unreimbursed, mileage claimed is mileage not paid by my employer for business travel in my own vehicle. And, perhaps "liable" was a poor choice of words. I think "accountable" is probably better. Just seems we pay a fair premium for sound advice in completing our returns and advising us on what we should include and what not to include (so to speak). I’d like to believe I’ve paid for a bit more than someone simply filling in the blanks with the info I’ve provided. Wouldn’t be much of a service if that were the case.

I would like to open a franchise or small business in early 2010. I am saving a lot of money per month, but want some input on tax-smart ways to accumulate the capital that I will need. It seems that the majority of ways to lower my adjusted gross income all involve locking away money until retirement age, which does not help me accrue capital now. Municipal bonds are great for the short term, but don’t have any tax benefits except on the interest that I earn… half beneficial. I need something or combination of things that will lower both my AGI and allow me to save for the less than five year term efficiently. Ideas??

I am currently not maxed in 401(k) but close, and am in the process of purchasing a home for the tax deduction.

Thanks Sincerely