1099-MISC: Business Expenses for Independent Contractors 

1099 and other tax forms

 

 

From NerdWallet, Romona Paden discusses how independent contractors handle expenses.  Romona writes:

How to claim business expenses

You report your nonemployee income — and claim expenses — on a Schedule C or the simplified Schedule C-EZ. If your net earnings from self-employment are more than $400, you also need to fill out a Schedule SE to determine your self-employment tax. As you prepare to fill out your return, make sure you’ve got all the necessary documentation for income and expenses.

Your net profit is the amount you were paid for your goods or services minus your business deductions. Examples of such deductions include:

  • Advertising.
  • Depreciation.
  • Home office expenses.
  • Transportation and travel — both locally and away from your home.
  • Business, professional and education licenses, and fees.
  • Office supplies.

Each business expense you claim must meet certain criteria:

  • Ordinary and necessary: An ordinary expense is one that’s common to your profession. The expense is considered necessary when it’s one that’s appropriate or helpful in developing or maintaining your business.
  • Current expense: An expense that benefits your business for less than one year.
  • Directly related to your business: An expense that is not related to personal costs.
  • Reasonable amount: An expense of a reasonable amount that doesn’t include inflated pricing.

To help independent contractors and other “self-employed” individuals understand their tax obligations, the IRS has set up a website with guidance on everything from quarterly tax payments to home-office deductions.

Source: 1099-MISC: Business Expenses for Independent Contractors – NerdWallet

And for a comparison of tax software, see Best Tax Software of 2019: Online Preparation Services

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