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Dealing with the 1099K and Finding Tax Write Offs

By John V

Republish: EasyPublish™
Published: 28Feb2012
Word count: 477
Viewed: 223 time(s)

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Tax write-offs become more and more appealing the more taxes a person faces. When it comes to self employment taxes, the desire to find every conceivable reasonable write-off becomes even stronger, if that's possible. Regardless of a person is a journalist, an artist, or sells goods online and needs to file a 1099K, a clear understanding of what should be deductable and how to reliably and safely do so is essential to maximizing the profitability of working for one's self.

Of course, first it's important to understand how write offs work. The basic idea is that some business-related expenses are necessary for the activity of doing that business, and as such, income devoted to those ends should "skip" taxation and flow directly from income to investment. So when a mail courier buys new shoes for his or her winter mail route, he or she can declare a yearly income that is $50 - or whatever the shoes cost- less than what was actually received by claiming the shoes as a deduction. This saves the courier from paying taxes at all on those $50.

For the self-employed, the list of deductibles can be quite long. The most obvious one is the place of work. The cost of renting an art studio, or if it's a home office some portion of the cost of the home that reflects the area that is the office, can be deducted from income up to predetermined limits. In the same light, some percentage of the cost of utilities, the cost of an internet connection and wear on a computer if they are necessary for business, and any costs related to business meetings and communications such as lunches and cell phones can also be deducted.

The list gets more detailed from there, so finding deductions requires an understanding of what the IRS considers a relevant business expense. A person who typically works from home but has to leave the house to focus because the kids have the day off from school can probably deduct the cost of that day out. Similarly, any driving done for work, even if it includes a personal errand "on the way" is deductable in the form of wear on the car. These kinds of reasonable, necessary expenses will decrease the total earnings that a person has to claim and pay taxes on, even if filing a 1099K.

Of course, knowing what can be written off is just a small part of the puzzle. Actually getting the deductions accepted requires thorough, clear documentation such as receipts, and usually some expertise with tax documents to avoid making mistakes. Whether the process for filing self employment tax returns will include a 1099K or not, it is a good idea to get a professional's help with deductions to get the best write off amount possible.

The 1099K Just Gives Small Businesses and Those Facing Self Employment Taxes More Reasons to Maximize Tax Write Offs.

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