HELP! First time filing as 1099 independent contractor!?

Question

Can I deduct gas? lunch? coffee? car wear and tear? Any great tips on cutting my tax amount?

I work as researcher/web manager in DC and live in MD. Thanks!

Answer 1

You have 2 options in filing your taxes. The first is deducting your expenses as employee business expenses using form 2106. The down side to this is your expenses will be listed on Sch A, itemized deductions, and only deductible in excess of 2% of your adjusted gross income, Then that figure is added to the rest of your itemized deductions to determine if the total exceeds your standard deduction. This is what many people do but what you should do is complete a Sch C, profit or loss from business. You will be able to deduct any legitimate expenses related to the job. First, your vehicle. You will still complete a form 2106 for this. You have 2 options, the mileage deduction which is the easiest or the actual expenses. The actual expenses involves having receipts for everything (although not needed to submit, only in case of an audit). You can deduct insurance, repairs, gas, etc. You also will depreciate your vehicle. The mileage deduction gives you a flat 44.5 cents per mile. That figure includes depreciation and all other expenses for the car. Here you are only requried to keep some type of log showing the business miles. That can be as simple as the date, address going to the job and the round trip miles. Once again, nothing to submit, only needed if you are audited. In addition, you can still deduct tolls, parking fees, etc. Coffee, no, but meals as a legitmate business expense can be deducted. The business miles or use of the car must be kept separate from the personal miles. Anything related to the business can be deducted, if you buy paper, pens, paperclips; if you use a cell phone, a computer, charges for the internet. Again, you have to separate business from personal use. Pub 535 from the IRS, available at irs.gov is helpful. Since this is your first time and it is getting close to the deadline, you might want to consider filing form 4868, this is an extension and will give you an automatic 6 months to do some research. You still have to submit payment of what you think you may owe.

Recieving a 1099 not only causes you to pay income tax but also you will be paying social security tax on this money, both the employers and employees share. When completing your income tax, KEEP THIS IN MIND. If you are not sure if a deduction or any question you have is correct, take it! The IRS is not going to call you and ask if you qualify for this or can deduct this. If you are wrong they will let you know. I've told this to many people whose taxes I have done, just be aware that there is a possiblity they may deny something you claimed and you will have to pay. Although receipts and records are not required to be submitted when you file your taxes, they are an absolute necessity if you are audited.

Answer 2

1099 Independent Contractor Deductions

Answer 3

Lunch and coffee, no. If you have business miles, you can take EITHER actual expenses prorated for the business miles you drive, not your personal miles, OR mileage at 44.5 cents a mile which often is better and is definitely easier.

Answer 4

I would take the mileage it's better than gas and repairs and you can't take the mileage to and from work only from job site to job site. You can take meals( not just your lunch only business lunches) and entertainment also lodging.