21 replies to this topic

[Princess xR1]

So as some of you may or may not know, I am an independent contractor. So basically I get fucked by taxes. I have to pay employer and employee tax. Which then accounts to about a 1/3 of my check. The way to get around this is tax write-offs. I was talking to my dad about this because currently I have about $1400 worth of shit I can write off including certifications, clothes, and equipment for my job. (personal trainer) I made the point to my dad that the IRS allows me to write off 50 cents a mile to and from the office to the appointment site. So technically my house is my office, and the gym is the appointment site. That makes for 32 miles round trip, almost exactly. (according to google maps) But my dad said he thought I'm only able to write off federal income tax. I was under the presumption I would be able to write off at least state and federal. Wasn't sure about social security (which is 15% for me -- fuck you old people).

 

So my question is for anyone that has experience with this -- since google was unhelpful, can I write off my personal expenses for my job for state, federal and social security taxes?

[Haflinger]

You're American, right?
 

Employ a tax accountant. Even one of the tax chains will save you money.

 

With that said, you might want to think about incorporating if you're bringing in some good cash. The thing about incorporating is that corporations tend to pay less in taxes. However don't do it without legal advice, and if you're not making enough to pay a lawyer for tax advice, then you're not making enough to incorporate either.

[Thrash]

If you get paid on a 1099 and not a W-2, I believe you can.

[Princess xR1]

Probably not making enough to incorporate. Getting an LLC in my state is roughly $550. As opposed to a neighboring state it is $50.

[Princess xR1]

If you get paid on a 1099 and not a W-2, I believe you can.

I get paid on a 1099. Does that mean all of the taxes?

[ᗅᗺᗷᗅ]

Also you probably won't make enough to actually owe anything at the end of the year.  Other than the Social Security stuff you should get it all back next year.  Think of it as a way of saving.

[Princess xR1]

1099 works differently than W-2 I believe.

[ᗅᗺᗷᗅ]

It does, but you can still pay ahead if you want.  Then at tax time you'll get it all back except for Social Security.  Or you can do nothing and at tax time probably owe nothing but Social Security, which will probably just be a few hundred dollars.

[Learz]

I don't know enough about state taxes to help you. Also note that every state is different.

You should certainly be able to write off most, if not all, of your expenses for federal taxes.

Social security is a different animal altogether.

 

I echo Haf and say you should definitely look up a tax place. Even going one time will save you a considerable amount on your taxes.

 

As for incorporating, note that you can incorporate in any state you want to. You just need to maintain an address/agent in that state to service any papers filed. There are companies set up that is basically one guy acting as an agent and address for hundreds of companies. But if you go the incorporation route, you'll need to have regular tax advice in order to gain the most benefit. When you stop by a tax place, just ask about incorporating. They'll look at your paperwork and be able to give you an estimate if it will be worth it or not for you. As a general rule though, you need to be pulling in about 75K+ to really make a personal corporation work for you, otherwise it's about the same as a small business owner. But they may be able to work something depending on what state you're in.

 

tl;dr go to a tax place. While there, ask them all this.

[Phate]

Also you probably won't make enough to actually owe anything at the end of the year.  Other than the Social Security stuff you should get it all back next year.  Think of it as a way of saving.

It's a way of saving, but it's also a way of giving the government an interest free loan. I've read that one of the better options is to add exemptions to have as little as possible taken out, and instead put the same amount into a savings account or CD and at least make a little on it.

[ᗅᗺᗷᗅ]

He already has as little as possible taken out — zero.  It's a form 1099, used for so-called "independent contractors" but actually just a way for businesses to worm their way out of paying benefits for employees.  But that doesn't mean he can't pay ahead.  Yes, it's the equivalent of an interest-free loan to the government, but we're not talking about huge sums of money here.  I don't know how much he makes, but we're probably only looking at a couple grand, tops, in taxes.  And that's spread out over the course of a year.  So, what, $40 a week?  That's not a lot to invest with, and you're not going to make much on returns.  For that little amount it's easier just to use the "overpay taxes as a savings plan" approach.

[Chancellor Gunn]

If you incorporate can I have sex with the CEO? That's one of those bucket list things

[Infopowerbroker]

If you are going to take deductions, make sure you have receipts or mileage records for everything you deduct. Audits love to screw folks over for not having proper documentation.

[ᗅᗺᗷᗅ]

If you are going to take deductions, make sure you have receipts or mileage records for everything you deduct. Audits love to screw folks over for not having proper documentation.

 

That's very true.  But at his level the odds of an audit are slim.

 

I would check out the IRS Self-Employed Individuals Tax Center.

[King Biscuit]

...instead put the same amount into a savings account or CD and at least make a little on it.

 

Interest rates are shit, money doesn't grow in banks.

You're better off just saving to put towards taxes, and try to get all the exemptions you can.

 

Also: echo

See a professional.

[ᗅᗺᗷᗅ]

I will offer a word of warning about professional tax preparers:  They may be helpful for complex or unusual tax situations, but for most typical workers they are a waste of money.  I went to H&R Block a couple years ago to do my taxes, and despite the lofty claims of their advertising they didn't find anything that I wouldn't have found myself.  When all was said and done I got the same refund I would have gotten anyway, minus $200 for the privilege of H&R Block's company.  Taxes are not as complicated as people make them out to be, especially if you're making $30,000 a year or less.  Just pay them quarterly and you'll get most of it back at tax time.

[rotty]

Enjoy adulthood xr1  

[Haflinger]

I will offer a word of warning about professional tax preparers:  They may be helpful for complex or unusual tax situations, but for most typical workers they are a waste of money.  I went to H&R Block a couple years ago to do my taxes, and despite the lofty claims of their advertising they didn't find anything that I wouldn't have found myself.  When all was said and done I got the same refund I would have gotten anyway, minus $200 for the privilege of H&R Block's company.  Taxes are not as complicated as people make them out to be, especially if you're making $30,000 a year or less.  Just pay them quarterly and you'll get most of it back at tax time.

Yes, this is all true for ordinary employees. For anyone who can claim business expenses etc. they are essential because they know exactly what can be deducted.

 

Most employees have close to nil deductions. Independent businesspeople have tons of them.

 

That said, H&R Block does find a lot of deductions that ordinary people miss. No offense Jor, but you're a lot smarter than most people, and H&R Block does help stupid people with taxes.

[Princess xR1]

I'm currently taking 33% of my checks out for taxes and it's sitting in my savings account lol.

[rotty]

I'm currently taking 33% of my checks out for taxes and it's sitting in my savings account lol.

If you can keep this up, kudos to you xr1. It will save you so many headaches.