Alright, so this is my first year having to do anything for taxes aside from the W2 EZ form, so I’m trying to come to understand what to expect in April. I’m reading up on the 1099 and begrudgingly downloading the IRS’ 59 page document. It’s boring as hell.
In any case, I’m trying to understand what I can deduct or not. I work as a 1099 for a government office, so there is no home deductible and such. But can I deduct what I spend on a MARTA pass? Or when I do buy a car, can the car be deducted? I’ve got a roommate selling me his old car for a dandy price on monthly payments and I’ll be using it to get to and from work 90% of the time, so can I deduct what I pay for it?
Thanks for the info guys.
Too many questions.
Half of what I get from my clients as an independant consultant are 1099s, rest are W-2s.
On MY 1099s, there is just a statement of earnings. No witholding, for state or federal taxes. Just pure earnings.
MOST of your expenses will be tax-deducticable. But not all. Depends on your individual circumstances.
On the car, you can either deduct the actual work expenses, or take the standard mileage deduction. If you use this car for even 1% of personal use, you have to take that percentage off. Sales taxes and such will have to be pro-rated in this case also.
If you are AWAY from your home tax base, then you can deduct the MARTA (That’s Atlanta rail, BTW) costs as they relate to business use.
I’ve probably missed something here, so Dpers feel free to correct or expand on this.
Other stuff: I heartily recommend a good tax person or a software solution like TurboTax or TaxFree, it makes things SO much easier. Also, I do realize that I am making some assumptions which may not be valid…Are you going this gig from your home town, or are you travelling to it? In which case, you need to factor in airfare , car rental, and hotels.
Too many questions.
Half of what I get from my clients as an independant consultant are 1099s, rest are W-2s.
On MY 1099s, there is just a statement of earnings. No witholding, for state or federal taxes. Just pure earnings.
MOST of your expenses will be tax-deducticable. But not all. Depends on your individual circumstances.
On the car, you can either deduct the actual work expenses, or take the standard mileage deduction. If you use this car for even 1% of personal use, you have to take that percentage off. Sales taxes and such will have to be pro-rated in this case also.
If you are AWAY from your home tax base, then you can deduct the MARTA (That’s Atlanta rail, BTW) costs as they relate to business use.
I’ve probably missed something here, so Dpers feel free to correct or expand on this.
Other stuff: I heartily recommend a good tax person or a software solution like TurboTax or TaxFree, it makes things SO much easier. Also, I do realize that I am making some assumptions which may not be valid…Are you doing this gig from your home town, or are you travelling to it? In which case, you need to factor in airfare , car rental, meals, and hotels as well.
Crap. It did double the posts. Moderators, would you be so kind as to delete my post (#2) from here?
Thanks!
My information is a little old, but, in general, you can deduct expenses necessary to do the job. IIRC, though, normal commuting expenses are not deductible; it is not considered business travel. I think it’s the same for car expenses – they only come into play if you are required to travel away from home.
I do know that the 1099 instructions aren’t going to be useful; most likely, they’ll be talking about who has to file the form and such. You need to check out the instructions for Schedule C instead. That’s where you include business income (which you generally are if you are getting 1099 income. You also have to fill out an Schedule SE to deal with your Social Security taxes if you earned more than $400.
And you have been sending in your estimated tax payments, haven’t you? If not, you have until January 15 for your entire payment. The IRS won’t like it if you pay it all at once instead of over the year, but they like it even less if you pay all your taxes on April 15.