1099 Independent Contractor Tax Deduction

1099 Independent Contractor Tax Deduction

Recently we got a question asking about the tax deduction for the 1099 contractor. Caller wanted to know if he can deduct the travel expense from his home to his office.

In San Francisco Bay Area, many of us are 1099 contractors, working for consulting companies or own our small business. With gas prices reaching $5 per gallon, it is no wonder that we are starting to pay special attention to the travel expenses.

┬áSmall answer, like always, to this question is – Yes, but it depends.

You can deduct travel expense from your office to your client site. Meaning, if you have a home office and you travel from your home office to your work than that expense can be deducted.

However, if you simply travel from your home to your work than that expense is not tax deductible.

 Set Up A Home Office To Take Tax Deduction.

Your home office should be separate place in your home that is dedicated as your office. There is no special rule that define what furniture or equipment you need to buy to claim a place as your office. However, your office should serve as your “HOME OFFICE”. Meaning you should be able to do operational task from such place. Moreover, this office space should not be used for personal use. It should be dedicated forth office use only.

With increasing number of audits from the IRS, I suggest that you keep a picture of when your office was set up. Taking your home office pictures can also help strengthen your position in case of the audit. Making a list of things you do from your home office can also help you establish your home office.

 

 

 

Sanjiv subscriber