What Deductions Are Allowed When You Receive a 1099?

by Kevin Johnston Google
You can reduce your taxable income with deductions related to your 1099.

You can reduce your taxable income with deductions related to your 1099.

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When you receive a 1099 from a company you worked for, that means the company did not consider you an employee. You have the status of independent contractor. The Internal Revenue Service considers you self-employed, at least for that portion of income that is indicated on the 1099. As a self-employed person, you become eligible for business deductions.

Supplies

You can deduct all supplies used to perform work related to the 1099. For example, if a company issues a 1099 for landscape services you provided, you can deduct tools, materials and office supplies for your landscape service. The supplies must be necessary to the operation of your business. Do not mix personal and business supplies. Keep receipts in case you need to support your claim.

Vehicle Expense

You can deduct expenses of a vehicle used to transport you to a work site or to haul materials at that work site. You can choose from two methods. You can deduct all actual expenses, such as tires and gas. Or you can take a mileage deduction. The IRS allows 55.5 cents per mile (as of 2012) for your vehicle. For example, if you claim 12,000 business miles, multiply times .555 and you see that you qualify to deduct $6,660 off your taxable income. If you use the vehicle for personal trips as well as business transportation, deduct only that percentage that applies to your business.

Insurance Premiums

You can write off all your health insurance premiums. For example, if you pay $500 per month for health insurance, you can subtract $6,000 from your annual income before calculating taxes.

Meals

Any meals you pay for in a business context are 50 percent deductible. You can write off half the cost of meals you pay for during business travel or when entertaining clients.

Business Travel

You can deduct 100 percent of business travel expenses (except for meals) associated with the work covered by your 1099. This includes air fare, taxi fare and hotel expenses.

Marketing and Advertising

Deduct expenses for advertising online, on television and radio, and in print publications. You can also write off the cost of fliers, business cards and posters you make to advertise your business.

Home Office

If you work from a home office, you can deduct the cost of the space you use. Calculate the percentage of your home space occupied by your office. For example, if you dedicate 10 percent of your space to an office, calculate 10 percent of your rent or mortgage interest. Also calculate 10 percent of your utilities. These are the amounts you can deduct for a home office according to IRS guidelines.

About the Author

Kevin Johnston writes for Ameriprise Financial, the Rutgers University MBA Program and Evan Carmichael. He has written about business, marketing, finance, sales and investing for publications such as "The New York Daily News," "Business Age" and "Nation's Business." He is an instructional designer with credits for companies such as ADP, Standard and Poor's and Bank of America.

Photo Credits

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