What You Need To Know About A 1099 FormAll Articles
Do you work as a freelancer or independent contractor? Chances are you’ll receive a 1099 form. If you make more than $600 with a client, they are required to send you a 1099 form by the end of January. Instead of of receiving a typical W-2 that traditional employees receive, most freelancers will receive the 1099-MISC form that is used to confirm that all their earnings are reported to the IRS.
While this can be overwhelming for new freelancers and independent contractors, a little organization can go a long way. Proper organization allows you to maximize your tax write-offs and keep more of your earnings. Deductions such as car expenses and home office deductions are a couple of the biggest tax breaks you can get.
Car expenses including mileage can provide one of the biggest tax write-offs for freelancers. The easiest method to use is to claim the standard mileage rate. This allows you to write off 54 cents off every mile you drive for business-related purposes. These miles include:
- Driving while working
- Going to meet clients at a seperate location
- Heading out of town on business
The standard mileage rate takes into account gas, insurance, maintenance, depreciation, and insurance. While you can use the actual method of deducting your car expenses, the standard mileage rate is far easier to track and report.
Home Office Expenses
If you’re running an independent business from your home, you can potentially write off part of your home expenses. As long as you have a dedicated space that serves as your primary place of business and is used exclusively for work, you can use it as a tax write-off. Using the simplified method is the easiest way to deduct your home office. It includes everything in your home office and can be figured out by finding the square footage of your home office. Here are a few things you need to know:
- You can deduct $5 per square foot.
- You can only deduct up to 300 square feet per year.
- Total deduction cannot exceed $1500.
Make sure you don’t miss out on any deductions. BIG offers professional tax services to make sure you get the most tax write-offs possible.