1099_NEC Contractor to start 2021

[MYosh45]

I started a work at home job on a 1099-NEC for a month which then converted to a W2 employee in 2021. Can i deduct the items needed to initially setup this job like desk and chair, internet connection etc?

Thanks in advance.

Mike

[AliciaP1]

You can if your original intent was to continue the work as a contractor.  If you were aware the job would likely turn into a W-2/employee relationship, then you cannot.

If you can deduct the expenses based on this, you need to input the 1099-NEC as Self-employment Income and mark that you both started and stopped the business in 2021.  Continue through the system entering the income and the expenses incurred.

If you cannot deduct the expenses, you should enter the 1099-NEC as a 1099-NEC (and not Self-employment Income) and mark that the amount should have been reported on a W-2.  Proceed through the questions and make note of the additional form that TurboTax notified you that you will have to file outside of your annual return. 

[MYosh45]

Thanks for the reply.  I started work with this company and thought I had enough time for only part time (less than 30 hrs per week is 1099 only) but went to W2 (>30 hrs) only after realizing I could commit more time.

Does this help clarify?   

Thks,

[PattiF]

Yes, that clarifies the situation. Since this work was expected to be 30 hours or less a week, the office expenses would be allowed for the part of the year before you became a full time W-2 employee.

[MYosh45]

Thanks for the info.  Would I expense all startup items like desk, internet service, required professional membership and licenses as 1/12 cost if the 1099 term lasted 1 month before going W2?  

TIA,

[AnnetteB6]

That would be a reasonable thing to do since your self-employed business only lasted for one month.  

@MYosh45