About two months ago, we (2nd year med students) recieved our contracts for FY2011-12. And I was pretty ticked off by my reclassification. No longer a student, now I'm an "independent contractor." Cool. That's fine. Been there before. But now I'm looking cold and hard at some previous student loans coming due. Which isn't terribly worrying. I can more than make the minimum calculated payment, and still make rent, tuition, books, fees.

I'm not terribly sure why we're now "independent contractors." Or at least why I am. I haven't discussed the specifics of my contract with other students, just vague general information. I do think I got the better end of the stipend stick, though. Some of my fellow students? Not so great at negotiating. We're still covered by the school's liability policy, and don't have to seek our own liability. We still have to pay into the school's health plan, which doesn't actually have such hot coverage. But apparently we were only "students" for that first year. Or at least I was.

However, I can now pull off a plan to severely decrease my tax burden. A good example was provided by Brett Arends at the Wall Street Journal back in April. My favorite part of that example is the 401(k) matching. Dipping in at both ends, and reducing the taxable income? I am so on that like white on rice. Between IRA and 401(k) contribution and matching (I'm my own employer again!), Lifetime Learning Credits, Health Savings Account, Health Insurance, and up to $2,500 in interest on student loans, I'm looking at a much, much lower check being written next year for 2011's tax filing. If I have to write one at all. Hopefully not, but capital gains can be a pain to mitigate.

I could probably lower my burden further by buying a home, but let's face it - any primary residence home, anywhere in the world is just a giant money sink. It's definitely not an asset, because you can't liquidate it quickly. You could probably borrow against it, but that money isn't real. You are now responsible for any and all maintenance required. Pay property taxes. And you have to insure the sucker. All in all? Not worth the savings on the interest of your mortgage.

Although, I bet I could reduce my burden further by doing some asset management on the side for fellow students, residents, physicians and researchers. They're not exactly the most finance savy bunch. And I've had to talk many people down from completely ludicrous financial positions. Home? Not an asset like I already said. Also, "401(k)"? That's a tax code. You aren't restricted to only $401,000 upon retirement. Offshore tax shelter? Those don't exist unless you want a nice vacation at Club Fed.

If I assumed some of their investment burden, I bet that would lower any capital gains for the year...