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First, kudos to everyone on the fool; you are all a fantastic group of people! I am a sole proprietorship (independent consultant) with one dependent. I am cash basis and the 4th qtr of 2008 provided the most revenue. I grossed 170k in 2008 (I am trying to remain humble and know that I am blessed). I have not fully funded my SEP IRA or my HSA for 2008. My contract ends on 2/15, so I have been saving cash throughout 2008.

Currently, I have about 6 months of cash on hand now and will have an additional month at the end of the contract. I want to keep the most cash on hand to help us during the time I look for another contract. Should I fully fund my SEP IRA and HSA which lowers my tax, but uses up 1/2 my cash or do I just pay the tax (I am assuming I will incur a penalty as well)? I estimate 2009 revenues to be around 90k.
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