Tax season is almost here and we want you to get the most out of your return so you can stuff it in your pocket (or bank account) with a smile! Don’t stress… we’ve got some great deductions that independent contactors can write off on a yearly basis! Get your receipts, bills and notes ready!
MILEAGE / VEHICLE.
If you’re driving to events for work you may deduct the dollar value of business miles traveled on your tax return. You can either use the actual expense incurred OR use the standard mileage rate stated by the IRS for the tax year. But, you can only do one or the other, and you can’t easily switch back and forth whenever you’d like. For 2014 the mileage rate is 56 cents per gallon. If you use the vehicle for more than 50% business, you may deduct actual expenses such as fuel, repairs, insurance, depreciation, garage rent, car washes, loan interest, etc. However, if you use your car for less than 50% business then you’re required to use mileage only. Keep track of your miles by marking all of your business related destinations in an appointment book or notebook. It is also a good idea to note your mileage as of January 1st and then again at the end of the year on December 31st. If you’re ever audited the IRS will ask for all of this information. It’s better to be safe than sorry!
SUPPLIES.
If you’re working an event and are required to wear a specific shirt, skirt, type of shoe, costume, are required to have props, have to purchase a ‘demo’ table for in-store events or a cooler to keep items you’re sampling cold, you can write these items off. This includes anything that you buy for an event you’re doing. You can also write off having any of these items laundered or cleaned.
TRAVEL.
Did you work events outside of the city you live in, but still within the U.S., where you had to take a plane, train, bus or cab? You can deduct 100% of your airfare, bus ticket, etc.Room and board, hotel tips and 50 percent of meals are eligible for deduction only for the business days that you are working that event .
FOOD OR DINING EXPENSES.
If you are an independent contractor working from home and have business meetings to attend in perhaps a restaurant or coffee shop, you can write these receipts off. If you take clients to say, a baseball game, and try to write it off, you may be raising a red flag to the IRS. The IRS considers volume levels for conducting business and a loud baseball game or a night out at the bar probably won’t fly with them.
HEALTH INSURANCE.
If you’re an independent contractor and also work a full time job through an employer that provides you with health insurance, this won’t apply to you. Independent contractors that work solely for themselves and pay their own health insurance premiums can deduct 100% of their premiums.
CELL PHONE.
We are ALWAYS on our cell phones in this day in age. It’s become a third arm for most of us. As independent contractors it literally is our life. We are our phone in every aspect, some ways others don’t even know about! Figure out how often you use your cell phone for business versus personal use, then deduct ONLY the business percentage. If you are working an in-store event and have to check-in with a manager via GPS on your phone, take photos of stock on shelves before and after your demo and email those items to your manager, make a phone call to a manager, etc. You have to figure out how often you do these types of events and how long you’re on your phone for out of that entire day and calculate all time the phone is used. If you do demos on weekends and don’t work during the week, it’d be a safe assumption to say that you may use your cell phone for 25% business, and write that off.
ADDRESS CHANGES.
If your address has changed, make sure you notify anyone you’ve worked for that might send a 1099! Delays in receiving these forms can be a huge bummer.
We hope these tidbits help you out, and we’ll leave you with one final, vital piece of info. LET THE PROS HANDLE YOUR TAXES! And we mean a CPA, not just any old tax consultant with attractive tax return fees. Also avoid using DIY software programs. This may literally cost you thousands and thousands of dollars in the end if you don’t complete your write-offs on the proper forms and utilize other tax credits you might be eligible for.
All of these things are great for independent contractors to know about, now you just have to keep yourself organized! Best wishes to you all on your tax returns this year!
– Team Brand Greet