What Can I Deduct as a 1099 Contractor

Elevation x Deductions (+13 More Yous Probably Didn't Know About)

As an independent worker, taxes can be overwhelming. Instead of an employer or company withdrawing taxes for yous from every paycheck, you need to keep runway of what you owe and make sure the IRS gets their part. Sounds complicated, but it doesn't take to be. When information technology comes to 1099 taxes, Pace has you lot covered.

Every year side job workers and contractors go out thousands on the table by not maximizing deductions. Saving coin at tax time depends on tracking deductions all year-round. Every mile you lot drive for work and every expense, fifty-fifty if information technology seems modest, tin add together up to thousands of dollars that stay in your pocket in April.

(Don't forget, the FREE Footstep app can help y'all save thousands of dollars on your revenue enhancement bill and hours of tax prep fourth dimension by automatically tracking your miles and expenses, surfacing money-saving deductions, and getting your forms IRS-ready. Become it today!)

As you track these expenses, brand sure you keep proof in the course of receipts, depository financial institution statements, mileage logs (or a tracking app like Footstep). When you file in Apr, you'll total these expenses per category and listing them on your Schedule C (the Stride App does this math for you lot). If you use software like TurboTax, the software volition prompt yous for the expense category totals and input them into the Schedule C for y'all.

Hither are the top 1099 tax deductions and some additional ones that you may take not known virtually!

Acme 1099 Tax Deductions

Mileage
Health Insurance Premiums
Home Office Deduction
Work Supplies
Travel
Car Expenses
Cell Telephone Cost
Concern Insurance
Commissions or Fees
Depreciation of Avails

1. Mileage

I of the largest expenses available to independent contractors to deduct is mileage. You have 2 options when information technology comes to this deduction:

Your actual auto expenses, like the cost of gas, maintenance, insurance, car payments, and depreciation, or
A standard corporeality for every mile yous bulldoze.

Selection 1 involves tracking all the expenses you lot put toward your vehicle throughout the year and keeping track of a lot of receipts. It's complicated, so most people choose Choice 2, which involves tracking only your mileage.

Option two is called the standard mileage deduction, and information technology usually saves drivers more money at tax time than itemizing all automobile expenses. As it turns out, the standard mileage rate is pretty generous unless you bulldoze a gas guzzler. The 2022 standard mileage rate is 56 cents per mile, and the 2022 rate is 58.5 cents per mile.

ii. Health Insurance Premiums & Medical Costs (Deducted on your Course 1040)

Yous have a lot of options when it comes to deducting insurance and medical expenses. At that place is a way for the same person to deduct medical expenses and insurance payments, plus get a subsidy for their insurance payments, all in the same twelvemonth! However, it'southward of import to empathize the difference between these three kinds of tax opportunities. Acquire how to deduct wellness and medical expenses.

3. Domicile Office Deduction (Line 30)

If you work at home, identify the percentage of your home you utilise for your business concern. This can be done past estimating the foursquare footage of your office as a per centum of your domicile's overall square footage. Multiply that percentage by your hire, mortgage, and utility bills to summate the corporeality you can deduct from your income. Alternatively, you tin can do the simplified method: $5 for every square pes of home office space (upward to 300 square anxiety).

Related: What to Do If You Oasis't Been Tracking Your Business Expenses in 2021.

iv. Piece of work Supplies (Line 22)

If yous purchase cleaning supplies, hot numberless to go along food warm, doggie bags for canis familiaris walking, or whatever tools for your cocky-employed business, all of these supplies are deductible. If it's something you use for both piece of work and personal reasons, yous'll demand to go on track of how much the supply is used for each in some style. Make sure you keep track of these expenses — they tin add together upward to a lot at tax time.

5. Travel (Line 24a)

Have to travel to another city for work? Those travel costs like lodging, airfare, rental cars, and local transportation are deductible. Be careful to non deduct any personal expenses here like meals with friends while traveling. Meals while traveling should be grouped with the Meals category we draw side by side. Ane caveat for this deduction: your travel must be "overnight, away from your residence, and be primarily for business."

half-dozen. Car Expenses (Line nine)

In lieu of taking the mileage deduction, yous can deduct the business portion of your "actual car expenses" like big repairs, leasing payments for a machine (primarily used for work), registration, maintenance, and auto washes. This also includes parking fees and tolls. Deplorable though, you can't deduct parking tickets.

seven. Cell Telephone Costs (Part Five)

Do you use your cell phone or home telephone for business organization as well as your ain personal use? If yes, and so yous can count that portion of your prison cell telephone bill used for business as a tax write off. Determine what percentage of your plan costs are for business concern and for personal use then deduct the business organisation portion. Exist certain to have evidence to substantiate the business use of your phone (Uber trips and hours spent using data, phone records of business calls, apps used exclusively for business and how much data used by those apps, etc.)

Tip: To save yourself some fourth dimension, yous can observe your telephone usage from a typical calendar week or month of work, and employ that average to the entire year!

8. Business Insurance (Line 15)

Have you lot purchased insurance for your self-employed business? This includes burn down, theft, flood, malpractice, errors & omissions, general liability, and workers compensation. These insurance costs are all deductible. Heads upwardly: this deduction category does non include automobile insurance and shouldn't include Any personal insurance.

nine. Commission and Fees (Line x)

For on-demand workers like Uber, you tin deduct the fees Uber takes equally a business organization expense (learn more here). Make sure to not pay taxes on their committee — that's paying taxes on money that never hit your bank account!

If you're a real estate broker or sales professional, yous tin deduct commissions or fees paid to non-employees to generate revenue (also known as "amanuensis fees").

10. Depreciation of Assets, Section 179 (Line xiii)

Do yous have computers, tools, furniture, cars, or office equipment that is worn down from your business utilize? You tin can deduct the depreciation of your business assets. Heads upward: taking this deduction requires y'all to fill out IRS Class 4562 (ane for each business).

Read more about electing the 179 deduction.

Other 1099 deductions you lot may not know almost

1. Advertising (Line 8)

Did yous create whatsoever marketing assets or materials for your cocky-employed business? Similar flyers, signs, Facebook ads, promotions, or events? Or perhaps you rented a booth at a trade show? Those costs are all deductible every bit well as the costs of creating and distributing ad materials (similar using a PR house or contract designers).

2. Function Expenses (Line 18)

Do yous accept an function for your self-employed work (that'due south non your home part)? Your office expenses are deductible! That includes any role cleaning services or building maintenance. Spotter out, make certain you don't deduct home role expenses, rent or utilities in this category — those all have their ain category for deductions (home office, rent, and utilities are all categories unto themselves).

3. Repairs and Maintenance (Line 21)

Did yous pay for any automobile repairs or maintenance costs for tools you lot used for work? Or did you pay to repaint your office or fix a cleaved reckoner? Costs similar these can exist deducted as repairs or maintenance. Be conscientious not to deduct automobile expenses here or actually pregnant improvements (which would go under "Depreciation or Section 179").

Tip: If you make an improvement to a business asset, then y'all'll deduct it a fleck differently! Whatsoever improvements that increase the value of an asset need to be recorded over several years on your taxes.

iv. Taxes and Licenses (Line 23)

Do you lot pay for whatever business organisation licenses or certifications related to your piece of work? This includes pocket-size business license, LLC or incorporation fees, or special accreditations to maintain. Be conscientious to not deduct your self-employment or income taxation here.

5. Rent or Lease (vehicles, equipment, belongings) (Line 20a)

Practice you rent an office space or charter a motorcar or any equipment for your business concern? Guess what? Those expenses are deductible.

6. Utilities (Line 25)

If you have an role space, then you can deduct utilities like power, water, garbage, and internet. Yous tin't, however, deduct utilities for a dwelling house office using this category — those go on with your "home office" deduction.

7. Contract Labor (Line eleven)

Did you lot hire a web developer to create a website for your self-employed business or hire whatsoever other contractors to help your business concern? Payments you made to them are tax deductible. This category is merely for contractors, so expenses like lawyer fees or employee wages would go elsewhere!

viii. Employee Wages (Line 26)

If you lot take employees, you lot tin can deduct their wages, commissions and bonuses — simple equally that. Employment taxes tin be deducted every bit well (on Line 23 - Taxes and Licenses)!

9. Employee Benefits Programs (Line 14)

Practise y'all have employees and provide them wellness insurance, liability, pedagogy assistance, or other benefits? Costs to provide those benefits are taxation deductible. But exist certain to deduct your ain health insurance and medical costs on your individual 1040 form.

10. Interest (mortgage) (Line 16a)

Do you lot have a mortgage on whatsoever property used for your business (and not for personal use or your primary dwelling)? Y'all can write off the involvement you lot pay for that mortgage using a Form 1098 that the lender may transport you to report involvement you've paid throughout the year.

11. Interest (car, other) (Line 16b)

Judge what? You lot can also deduct any interest on business credit cards, business concern lines of credit, or interest on automobile payments. Just brand sure you just deduct the portion of interest that'south related to your business — no deducting personal interest payments!

Tip: Looking for an easy way to decide your "concern usage" of your car? Find the business portion of your miles! If you drove 50,000 miles last yr, and know that 25,000 of them were for work, then your business usage of your auto is 50%.

12. Legal and Professional Services (Line 17)

Any fees yous've paid for legal services, taxation preparation or payment to other licensed professionals you tin deduct!

Tip: Be certain to only deduct the portion attributed to your business organization! For example, if you pay an actress fee in order to have your Schedule C prepared, you could deduct that fee.

13. Contributions to Employee Pension or Retirement Plans (Line 19)

If you lot make contributions you make to your employees' retirement plans (eastward.yard. 401(1000), Keogh plans, profit sharing plans), then these contributions are tax deductible. Make sure to deduct contributions to your own retirement on form 1040 Line 28).

For more than detail on what expenses require and allow, please check out the IRS guidelines for the Schedule C Form. The best bet is to notice a revenue enhancement preparer who specializes in self-employment taxes to help you maximize all of these deductions and keep as much of your earnings as possible.

Disclaimer: The information contained in this Guide is not offered every bit legal or taxation advice. The U.South. federal income tax give-and-take included in this Guide is for general information purposes only and is not a complete analysis or discussion of all potential tax consequences that may be relevant to a detail individual. In lite of the foregoing, each individual should consult with and seek advice from such individual's own tax advisor with respect to the tax consequences discussed herein. Any information contained in this Guide is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the U.South. Internal Acquirement Code of 1986, as amended.

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Source: https://blog.stridehealth.com/post/top-1099-write-offs