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
Working as a Coeur d’Alene independent contractor comes with great benefits: flexible schedules and choosing your work, are favorite perks among freelancers. , however, At tax time, Coeur d’Alene independent contractors often get the short end of the stick, partly because they don’t always know how to take advantage of 1099 deductions.
The payments made to independent contractors by Coeur d’Alene businesses are usually reported to the IRS on a 1099 form. If you, as a Coeur d’Alene independent contractor, completed a W9 form when you began working for a client or CDA company, then any income related to that organization is likely to be reported on 1099, and you will have to claim it when you file taxes with your accountant.
Because taxes are not withdrawn from payments made to a Coeur d’Alene independent contractor, the contractor must file and pay all his taxes. On an annual tax return, 1099 tax deductions can help CDA contractors reduce what can otherwise be a heavy tax burden. Here are some of the most popular types of deductions for Coeur d’Alene independent contractors:
Coeur d’Alene Home Office Deduction
One of the easiest—and most dangerous—deductions to claim, the home office deduction gets a bad rep for causing audits. Claiming a home office deduction doesn’t automatically put you in a red-flag territory with the IRS, but you do have to ensure that you use the space you claim solely for running your Coeur d’Alene business. If you work at your dining room table during the day, but you use it for the kids’ homework and dinner in the evening, that space isn’t eligible for the deduction.
Home office deductions are entered as a percentage of your entire square footage, so you’ll need measurements for your office space, your entire home, and the value of your home or mortgage payment to claim this deduction. The IRS doesn’t typically require additional documentation for most home office deduction claims.
CDA 401K Plans
Coeur d’Alene Self-employed individuals can contribute a particular portion of income each year as a 401k deferral. In 2015, the total contribution amount allowed by the IRS was $18,000 per person. While these salary deferrals may be tax-free, early disbursements from the Hayden retirement plan will be taxed. They may come with a penalty, making it important for Coeur d’Alene independent contractors to understand both current and future financial needs before committing to a salary deferral.
Coeur d’Alene Vehicle Deductions
Coeur d’Alene Contractors that use their vehicles for business purposes can either deduct a standard mileage rate or actual vehicle expenses on tax returns. For 2015, the standard mileage rate for Coeur d’Alene business travel is $0.57 per mile. To deduct mileage, you claim the total amount of miles driven for business purposes in a year on your return.
You’ll also need to report the starting and ending mileage for the vehicle for the year, which may show more mileage than you drove for Coeur d’Alene business purposes if you use a vehicle for personal driving too. You don’t have to provide the IRS with a mileage log, but you do need to keep a record of all trips and mileage for audit purposes.
Sometimes, claiming vehicle expenses instead of mileage nets you a larger deduction. Most independent contractors don’t go this route, though, because you have to keep copies of all insurance, registration, depreciation, loan payments, licensure, maintenance, parking, and toll receipts.
CDA Depreciation Deductions
CDA Independent contractors that purchase and use the equipment for their business may be able to take a depreciation deduction each year. Equipment might include vehicles, special tools, and machinery. A sewist might take deductions on a sewing machine; a painter might take a Coeur d’Alene deductions on a pressure washer used to prepare the exterior of homes for painting.
The IRS requires that property meet some conditions to be eligible for CDA depreciation:
- The Post Falls property must be in use over a period of one year
- The CDA contractor should be able to estimate the useful life for the property
- The CDA contractor must own the property
- The CDA contractor must use the property to generate income
Coeur d’Alene Health Insurance Premium Deductions
Coeur d’Alene Self-employed individuals may be able to deduct the amount paid in health insurance premiums each year. If your health plan is eligible for the CDA deduction, you claim the total paid on your return each year. Keep receipts or check stubs proving you made the payments to back up your claims.
Hundreds of 1099 tax deductions exist for small Coeur d’Alene businesses and independent contractors, so it’s often best to consult a professional when handling tax returns each year. Remember: To claim CDA 1099 tax deductions each year, you’ll need to complete a Schedule C and file the long 1040 form rather than the 1040EZ form. Some CDA deductions may require completion of an additional form or calculation worksheet, but it’s well worth the extra effort to make sure you don’t run into any problems down the line.
Whether you are a career eBay seller in Sandpoint Idaho, or just making some extra cash, taxes can be a very daunting part of your new venture.
Do Idaho eBay Sellers Have to Pay Taxes?
Any profit from your eBay sales is considered when you determine your taxable income in Post Falls. In addition, you may need to pay Idaho self-employment tax if you generate more than $400 in profits.
And don’t forget about the sales tax that you are required to collect from buyers in those states.
PayPal Did Not Send You Form 1099-K on Earnings
PayPal is only required to report payments you receive if the total payments for the year were over $20,000, and more than 200 transactions.
Even if you do not receive a Form 1099-K, you are still required to declare the income and pay the associated taxes. PayPal must disclose these payments to the IRS and most states, so the fact that you got paid didn’t get swept under the rug and forgotten.
Tax Deductions for Your Idaho eBay Business
Every time you make a sale on eBay, you should record the expenses. For instance, how much the item originally cost you, labor, hauling, shipping, advertising, and fees along with any taxes associated.
Making it yourself.
If you are making the product yourself, including the costs of direct materials, tools, and supplies.
Idaho Home office.
You’re only eligible to claim the Home Office Deduction if an area of your Coeur d’ Alene home is used exclusively for managing your Idaho eBay business.
This includes the office computer, office chair, and office desk associated with your Idaho business on eBay. You may be able to claim a portion of your router and Internet subscription, as well.
The most common vehicle deduction in Sandpoint is done by using the Standard Mileage or Actual Cost method.
Fees associated with Idaho tax preparation and tax-filing are deductible in Sandpoint.
Hayden Idaho Business Basic fire Insurance
If you bought all the different kinds of Idaho business insurance available to you, you’d be broke before you made your first sale. First, determine what insurance is required by law, what insurance is required by your landlord or by a lend, what insurance is extremely important, and what insurance you can do without.
Basic Hayden fire insurance.
Covers fire and lighting losses to your building, equipment, and inventory. Fire premiums vary widely and are based upon the location of your property, the degree of fire protection in your community, the type of construction of the building, the nature of your business, and of neighboring Idaho businesses. If you move into a building next to woodworking or dry-cleaning shop, your fire premiums will be high even if your Idaho-based business is a low fire risk.
- A sprinkler system in your building will sharply reduce your premium.
- Your computer may be covered under a fire insurance policy, but the data in your computer is usually excluded from coverage.
Idaho Business Extended Coverage Insurance
If you bought all the different kinds of Idaho business insurance available to you, you’d be out of money before you made your first sale. First, determine what insurance is required by law, what insurance is required by your landlord or by a lend, what insurance is extremely important, and what insurance you can do without.
Protects Hayden against storms, most explosions, smoke damage, riot, and damage caused by aircraft or vehicles. Extended coverage sometimes includes vandalism, although this usually requires a separate policy.
- Vandalism policies cover physical damage to your Idaho business premises but do not typically cover vandalism to web sites or computer files.
Hayden Assets that are being depreciated are written off over a period of years, known as the “write off period” (also known “recovery period”).
Here are the write off periods for assets most used by Idaho businesses and farmers:
3 Years: Coeur d’ Alene Idaho web site design and software.
Semi-trucks (not trailers). Racehorses over two years old. All horses over twelve years old. Hogs.
5 Years: office equipment and computers.
Some electronic equipment. Most equipment used for research and experimentation. Carpeting. Movable partitions. Appliance and furniture in residential rental property. Cars, trucks (other than semi-trucks), other alternative energy property. Portable gasoline storage tanks. Farm machinery and equipment. Cattle, sheep, and goats.
7 Years: Post Falls Machinery.
Equipment. Tools. Furniture. Store fixtures. Small signs. Railroad track. Horses other than those listed und “3 years.”
15 Years: large Idaho outdoor signs.
Sandpoint Gas stations, including their mini-marts (with some exceptions). Intangible property such as goodwill, trademark, trade names, franchise, customer lists, and covenants not to compete. Domain names purchased from a reseller. Patents and copyrights if acquired as part of a business you are buying (see other below). Leasehold improvements. Restraint and retail renovations.
20 Years: some farm buildings.
27 ½ years: residential rental buildings.
39 years: all buildings other than a residential rental property, farm buildings, restraint, and retail renovations, and some gas government.
Other: patents and copyrights are depreciated over the life granted by the government.