Self-Employed: Are you claiming all of your expenses?

If you are a freelancer, sole proprietorship, Uber driver, contractor, subcontractor, you work for yourself, receive a 1099-MISC, you get the idea, and you have more than $5,000 in business expenses, then you will need to file Form Schedule C as part of your next tax return. Do not fret, though. We will break down the Schedule C for you.

Schedule C is about reporting your income (e.g., 1099-MISC or cash), and your expenses. Reporting expenses can be challenging because you may not know which expenditures are reportable.

To help you better understand, ask yourself these three questions:

1. Was the expense business-related?

2. Was the expense required?

3. Do you have proof of the expense you are claiming?

You can report expenses like advertising, car and truck usage, and meals and entertainment, to name a few of the most common costs.

If you are still not sure what expenses to claim, consider the following example for an Uber driver:

Uber drivers cannot claim expenses like office usage, pension, profit-sharing plan, and employee benefit programs because an Uber driver does not have employees to generate those types of costs. But, they can expense things like mileage, car depreciation, car loan interest, gas, insurance, and phone expenses.

If you are reporting business-related miles, then you can apply the standard mileage deduction ($0.58 per mile) to calculate your expense amount. Consider the following example for a realtor that drove 15,000 miles for work:

The realtor multiplies 15,000 miles by the 2019 standard mileage deduction of $0.58 per mile to report $8,700 as a business mileage expense.

Of course, IOOGO Tax won’t make you do the math. But, we will ask you questions, you will submit your answers, and then our IRS-approved software does the calculations for you, just like in any tax preparation office. Our job is to provide you with the best technology available; your job is to answer as accurately and honestly as possible.

If you have joined the rest of us in the 21st century, you no longer take cabs. You call an Uber from the Uber app on your phone. You also don’t go to a tax preparer to prepare your taxes. You do it yourself. Remember, if tax preparers can follow the software steps, so can you.

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