Depending on your profession, you may have significant expenses associated with your home office; it could be a yoga studio, a place to store expensive equipment, or something else altogether. Is your Coeur d’Alene home office space is used only for work, and it is your primary place of business? If so, there are multiple options for calculating your Coeur d’Alene independent contractor tax deductions in this category. There are direct expenses to consider, like renovations and a paint job, as well as indirect expenses, like insurance, utilities, property taxes, and home repairs.
For Coeur d’Alene self-employed entrepreneurs in today’s marketplace, continuing education is crucial. While coursework can get expensive, all educational expenses are potentially tax-deductible! Webinars, business-related books, and subscriptions to professional publications are all included here as potential Coeur d’Alene deductibles on your 1099.
Depreciation of Property & Equipment
As an independent contractor, you’ve likely purchased property and equipment for your business. Over time, those items lose value; a printer you bought three years ago is worthless now than it was when you purchased it. That’s called depreciation. According to the IRS, if business purchases will last you more than a year, you can write off the depreciation of their value on your tax return. Repairs on the property used for your Coeur d’Alene business can potentially be deducted as well.
Some Coeur d’Alene self-employed contractors refer to their car as “their office” since they spend so much time there, going from job to job. Car expenses and mileage can be one of the most significant tax write-offs for these entrepreneurs. Look into the standard mileage rate to figure out the best method of deducting your car expenses. The rules for calculating the SMR are updated every year, so it’s good to stay current. Tolls and parking are also deductible–for extended meetings or projects; these can add up to a significant out-of-pocket expense for an independent contractor. Keep your receipts and add them to your 1099!
Do you have client meetings out of state, or attend industry conferences? When it comes to business trips, your airfare, hotel costs, and 50% of your meal costs can be written off as Coeur d’Alene business expenses. Even if you extend your trip to travel after the CDA business commitments have ended, you can include those travel costs to make sure that the amount of leisure days on the trip doesn’t exceed the total amount of Coeur d’Alene business days. For example, if you fly from California to Paris for a 3-day photography conference, you may want to extend your trip for two days of touring. 50% of the costs of meals and accommodations for the extra two days can be deducted, just like the first three days.
Do you have one cell phone for both personal use and Coeur d’Alene business? If so, you can write off a portion of your monthly cell phone bill. Similar to your home office, you’ll want to determine what percentage of your phone usage is Coeur d’Alene business vs. personal. You can then deduct that percentage of your phone bill on your 1099 form.
100% of your health insurance is one of the many Coeur d’Alene deductible expenses for CDA independent contractors to include on your 1099. In addition to health insurance premiums, expenses such as glasses, nonprescription medications, and visits to the chiropractor can be written off. There may be benefits for your spouse, as well:
Jose hired his wife, Liza, to take care of administrative tasks associated with his auto restoration business. Thanks to Liza’s employee status, Jose was about to provide her with family health care coverage through his Coeur d’Alene business. Her coverage, like his, was 100% deductible.
To fully focus on your business, you’ll need great contractors’ insurance. Having Coeur d’Alene contractor’s insurance can save you money in many ways, and that includes your 1099. Business insurance is one of the CDA tax deductions for contract workers!
There are lots of benefits to be a Coeur d’Alene self-employed contractor, and a qualified tax advisor can help you optimize your strategy when filing your CDA 1099 independent contractor income tax deductions. While hiring a tax advisor may seem like an unnecessary cost, the help they provide may save you valuable time, and you can write off their fees as a Coeur d’Alene business expense.
1. Rent and utilities
Do you lease office space for your Coeur d’Alene business? Regardless of whether it’s a desk in a co-working space or an entire commercial building, CDA freelancers and entrepreneurs can claim CDa business rent as a tax deduction.
The same goes for any utilities you pay for your office space—yes, the government cuts you some slack for keeping your lights on. This includes electricity, gas, telephone bills, and water bills.
2. Home office
For many of us freelancers, our homes pull double duty as both a residence and our workspace. Many Coeur d’Alene freelancers and sole proprietors work from home, so their residence is technically also their place of business. Don’t fret—you can claim a portion of the cost of your home office as well.
According to Publication 587 (Business Use of Your Home), you can deduct a portion of expenses for your home office. But don’t confuse these necessary costs of running a Coeur d’Alene business with your personal rent and utilities. The two are completely separate CDA deductions, so make sure you treat them as such in your paperwork.
Some of the typical costs you can include as part of Coeur d’Alene business-use-of-home deductions are:
- Utilities (heat, electricity, water, Internet)
- Mortgage interest
- Property taxes
- Home insurance
Before you jump on this deduction, however, make sure your home office meets the basic criteria. According to the IRS, your home must meet these two basic requirements:
- Regular and exclusive use
- Principal place of your business
You can also lean on this IRS guide to using their simplified or regular method to calculate these costs.
3. Advertising expenses
Whether you’re a sole proprietor or have a growing team, you likely spent some of your hard-earned dollars advertising your business last year. If so, those expenses could be deducted on your year-end filing.
Whether you spent your advertising budget last year on business cards, billboards, or anything in between, you can claim those Coeur d’Alene expenses.
You can also claim:
- Promotional and branded swag (think keychains, pens, coffee mugs, tote bags)
- Website costs (hosting, design, maintenance)
- Online advertising (banner ads, Facebook ads and other paid social media ads)
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Many Coeur d’Alene entrepreneurs and freelancers have insurance policies to protect themselves, their business, and any equipment. And many of these expenses can be deducted on your filing.
- Liability insurance premiums
- Commercial property insurance costs
- Coeur d’Alene Business interruption insurance
- Insurance on any equipment (other than vehicles, which is deducted as part of vehicle expenses)
5. Legal and professional fees
Did you seek advice from a lawyer to start up your business? Or did you rely on an accountant to file your taxes last year?
If so, you can likely claim those professional fees as a deduction on your year-end filing. You’re able to deduct the cost to consult external pros like lawyers and accountants, membership fees to professional organizations and even costs for business books, industry publications, and online subscriptions
6. Retirement plans
For those freelancers or self-employed workers contributing to personal retirement plans, you can likely deduct those payments.
Note that all accounts must be qualified retirement plans: that means you can deduct contributions to plans like SEP IRAs, SIMPLE IRAs, and 401(k)s.
7.Coeur d’Alene Health insurance premiums
Staying fit and healthy can get pretty pricey—especially if you’re self-employed. That’s why freelancers and small business owners can deduct the costs of their health insurance premiums in some cases.
Those who own their own Coeur d’Alene sole proprietor business or own more than 2% of their Coeur d’Alene S corporation also have some deduction options here.
If you’re self-employed, you can deduct the health care premium payments for yourself, your spouse, dependents, and any child under the age of 27.
8. Bad debts
No matter how hard you may try, many small businesses end up with a certain amount of “bad debts” each year. Essentially, bad debts are any liabilities you can’t collect on. For many self-employed workers and freelancers, that often means outstanding invoices your customers simply won’t pay.
Depending on whether you sell goods or services, bad debts you can claim include:
- CDA Funds you’ve loaned to employees, vendors, or other businesses
- If your Coeur d’Alene business sells goods, you may deduct the costs of unpaid purchases
- The same rule applies to companies who sell services
9. Office supplies and tools
It takes innumerable supplies to keep office functioning. As a small business owner or freelancer in Hayden, Post falls, Sandpoint, or Coeur d’Alene, you need specific tools to stay sharp and ready to work—think stationery, pens, notebooks, and the litany of other items found on your desk.
While many of these items are relatively inexpensive, these small costs can add up to some serious savings when used as a Coeur d’Alene deduction on your year-end filing. Some of the more common supplies and tools included in this category are:
- Pens and pencils
- Staplers and paper clips
- Day-to-day shipping for products
- Courier expenses
- Cleaning supplies
10. Salaries and wages
As your Coeur d’Alene business grows, you may want to bring on hired hands to run certain aspects of your biz. Not only do those CDA employees and contractors provide a valuable service (i.e., their skills and work), but you can also deduct their gross salaries and wages.
If you’re a Coeur d’Alene business with employees, you can deduct:
- Payroll taxes like:
- Coeur d’Alene Employer contributions for social security and Medicare (FICA)
- Employer contributions for federal (FUTA) and state (SUTA) unemployment taxes
- Salaries and wages like:
- Bonuses and commissions
- Employee benefits (life insurance, education reimbursements)
- Per diems and allowances
- Contract wages for workers paid more than $600 in a year