Legitimate 1099 expense deductions
Many people are under the assumption that if they work for themselves, they can write off all their normal life expenses as "business" expenses.
This is not true, and is in fact illegal.
You can't write off your weekly Costco run or your kid's birthday party bounce house as a business expense just because you thought about work for a minute during those times.
Really, you should have pretty minimal expenses as a 1099.
Here are some common legitimate ones:
- New computer purchase and software subscriptions
- Business insurance
- Miscellaneous admin fees (e.g. LLC fees)
- Education expenses (books, courses, etc)
- Home office
- Mileage driving to client site from your home or to other work events
- Health care premiums
With the exception of health care premiums, the total expenses on an annual basis for any of those things is probably no more than four to five thousand bucks (if you got the new laptop), meaning you'd save maybe a couple thousand of bucks at best, but more likely hundreds.
But the bigger problem is that being able to deduct business expenses is thinking too small. If you go 1099, you should be making at least 20% more than you current income based on being able to bill higher rates.
When you take home another $50,000 per year, who cares about a few thousand bucks?
Stay focused on the big picture of dramatically increasing your earnings, not saving a few bucks in taxes from your home office deduction.
Want the full playbook? Check out Going 1099.