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BJK2
Level 1

1099-NEC and W2 Standard Deduction and Expense Deductions?

Hello Intuit Community

I recently started a side job (self employed - contracted) and I'm curious about some things when I file my taxes next year about what can be deducted and what can't. With my side job I drive about 22 miles twice a week, which would be my only expense associated with my side job. I plan on taking the standard deduction for my main "W2" job but I was wondering if I can still deduct the expense of the miles driven for my side job in addition to the standard deduction. Also, when I file with TurboTax and enter in the 1099-NEC information will it also calculate SS and Medicare tax with the Federal Tax? I also plan to have my main "W2" employer withhold additional money to cover the taxes that I would owe on my side job, just to keep it simple. Is this okay or should I pay it separately each quarter?   

1 Best answer

Accepted Solutions
Hal_Al
Level 15

1099-NEC and W2 Standard Deduction and Expense Deductions?

Q. I plan on taking the standard deduction for my main "W2" job but I was wondering if I can still deduct  the expenses for my side job in addition to the standard deduction. 

A. Simple answer: yes.  But taxes aren't simple.  The standard deduction is not "linked" to your W-2.  It's you personal deduction.  Any expenses associated with your "business" (1099-NEC side job) are deductible in addition to your personal deductions, whether standard deduction or itemized deductions.  Business deductions are taken on Schedule C (the same place you report your business income). 

 

Q.   Specifically, can I deduct the  22 miles, I drive about  twice a week. 

A.  Simple answer: No.  Getting to work is commuting, whether salaried or self employed and commuting is not deductible.  But, it depends on timing. If you go directly from your W-2 job to your self employed job, those miles would be deductible. Example: you leave home drive 5 miles to the your W-2 job. When you leave work, you  drive 10 miles to your self employment job. At the end of the day you drive 15 miles home. Only the 10 miles between jobs is deductible. The first trip in the morning, from home and the last trip at night back home are considered commuting and are not deductible.  Deduct the 10 miles on Schedule C.

 

Q.  When I file with TurboTax (TT) and enter in the 1099-NEC information will it also calculate SS and Medicare tax with the Federal Tax?

A. Yes. TT completes Schedule SE, to pay your SS and Medicare tax.  This is known as "Self Employment Tax" (SET).

 

Q. I also plan to have my main "W2" employer withhold additional money to cover the taxes that I would owe on my side job, just to keep it simple. Is this okay?

A.  Yes. Your are correct, that helps keep it simple.  You do not need to pay  separately each quarter ("estimated tax payments").  

 

 

View solution in original post

4 Replies
Critter-3
Level 15

1099-NEC and W2 Standard Deduction and Expense Deductions?

 

If you are new to being self employed, are not incorporated or in a partnership  and  are acting as your own bookkeeper and tax preparer you need to get educated ....  

If you have net self employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099-NEC  for some of your income but you need to report all your income.  So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center 

Publication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf 

Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf 

                                         

Publication 463 Travel, Gift, and Car Expenses

Https://www.irs.gov/pub/irs-pdf/p463.pdf  

 

Home Office Expenses … Business Use of the Home

https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction

https://www.irs.gov/pub/irs-pdf/p587.pdf

Publication 946 … Depreciation

https://www.irs.gov/pub/irs-pdf/p946.pdf

                                              

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Self Employed return and will help you keep up in your bookkeeping all year along with calculating the estimated payments needed ....
http://quickbooks.intuit.com/self-employed


Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% for 2017 SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.
 


PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2017  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
 
- 2. You expect your withholding and credits to be less than the smaller of: 
    90% of the tax to be shown on your current year’s tax return, or 
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year, You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

OR Go to….
Federal Taxes or Personal (H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

 

How does my side job affect my taxes?

You’re considered self-employed—even if it’s just something you do on the side, like drive for Uber, babysit, or blog.

Your taxes are handled differently than when you’re an employee of a company.

As a self-employed individual you:

  • will pay self-employment tax (because income tax and Social Security aren’t deducted from your pay)
  • will get a 1099-MISC or 1099-K (unless you only accept cash or personal checks)
  • file a Schedule C, Form 1040 (this is how you report business expense or loss of income)
  • can deduct money you spent on work-related expenses (like mileage, home office expenses, and cell phone use)
  • can estimate the taxes that are due and make quarterly estimated tax payments during the year

Get started by entering your income from self-employment. We’ll handle the rest, from creating the forms you need to reviewing work-related expenses that can help reduce your taxes.

 

Related Information:

 

 

Hal_Al
Level 15

1099-NEC and W2 Standard Deduction and Expense Deductions?

Q. I plan on taking the standard deduction for my main "W2" job but I was wondering if I can still deduct  the expenses for my side job in addition to the standard deduction. 

A. Simple answer: yes.  But taxes aren't simple.  The standard deduction is not "linked" to your W-2.  It's you personal deduction.  Any expenses associated with your "business" (1099-NEC side job) are deductible in addition to your personal deductions, whether standard deduction or itemized deductions.  Business deductions are taken on Schedule C (the same place you report your business income). 

 

Q.   Specifically, can I deduct the  22 miles, I drive about  twice a week. 

A.  Simple answer: No.  Getting to work is commuting, whether salaried or self employed and commuting is not deductible.  But, it depends on timing. If you go directly from your W-2 job to your self employed job, those miles would be deductible. Example: you leave home drive 5 miles to the your W-2 job. When you leave work, you  drive 10 miles to your self employment job. At the end of the day you drive 15 miles home. Only the 10 miles between jobs is deductible. The first trip in the morning, from home and the last trip at night back home are considered commuting and are not deductible.  Deduct the 10 miles on Schedule C.

 

Q.  When I file with TurboTax (TT) and enter in the 1099-NEC information will it also calculate SS and Medicare tax with the Federal Tax?

A. Yes. TT completes Schedule SE, to pay your SS and Medicare tax.  This is known as "Self Employment Tax" (SET).

 

Q. I also plan to have my main "W2" employer withhold additional money to cover the taxes that I would owe on my side job, just to keep it simple. Is this okay?

A.  Yes. Your are correct, that helps keep it simple.  You do not need to pay  separately each quarter ("estimated tax payments").  

 

 

View solution in original post

BJK2
Level 1

1099-NEC and W2 Standard Deduction and Expense Deductions?

Thank you for the clear and concise answers to my questions but can you clarify a little on when I can deduct the miles? Here is a more detailed explanation of my commute habits:

The 22 miles would be the commute to and from my self employed job only. My W-2 job I mostly work from home and hardly ever commute into the office. So far, only once did I first commute to my self employed job and then straight to my W-2 job. It was 11 miles to my self employed job then 18 miles to my W-2 job and then about 25 miles back home. 

So on the days that I don't go into my W-2 job and only go to my self employed job I wouldn't be able to deduct that 22 miles (round trip)? And on the one occasion that I did first go to my self employed and then to my W-2 job I would be able to deduct the 18 miles I traveled from my self employed job to my W-2 job?

Hal_Al
Level 15

1099-NEC and W2 Standard Deduction and Expense Deductions?

Q. So on the days that I don't go into my W-2 job and only go to my self employed job I wouldn't be able to deduct that 22 miles (round trip)?

A. That's correct

Q. And on the one occasion that I did first go to my self employed and then to my W-2 job I would be able to deduct the 18 miles I traveled from my self employed job to my W-2 job?

A. That's also correct. The first 11 miles to the self employed job and the  25 miles back home  are not deductible.  You can deduct the 18 miles even though it is "from" rather than "to" the self employed job. 

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