Tax deductions for business expenses: must I itemize?
I have a part-time job as a direct sales rep. Can I deduct my business expenses (equipment, supplies, mileage) on top of my standard deduction, or do...
I have a part-time job as a direct sales rep. Can I deduct my business expenses (equipment, supplies, mileage) on top of my standard deduction, or do I need to itemize in order to deduct those?
Thanks!
I’d appreciate a DETAILED answer that gives some rationale for me to judge whether it makes sense. The first answer I’ve gotten so far doesn’t clearly answer the question and I couldn’t prove that the second answerer even read the whole question.
Ah! Thanks for the clarification. Yes, I work as an independent contractor with a 1099 form.
One problem is you haven’t said how you get paid as a direct sales rep. There are 3 possibilities.
If you get a 1099-Misc, then it’s considered self-employment and you put both income and expenses (that you have the proof for) on a schedule C. The net income is brought over to the tax return, line 12, so it’s not part of itemizing. You will also do a schedule SE for self-employment tax.
If you get a W-2, then you are considered an employee and if no other boxes are checked on the W-2, you list the income on line 7 of the 1040 and the *only* way to take deductions is using form 2106 and schedule A. Even then, you have to deduct 2% of your AGI first, so there may not be enought to itemize.
If the W-2 has the "statutory employee" box checked you still get to use schedule C.
You will know if you will be getting a W-2 because fica/mc will be withheld before you get paid.
That is done on a separate form – schedule C.
Itemize or standard. One or the other you cannot combine them
If you are an employee, yes you must itemize.
If you are an independent contractor, your income and expenses are both reported on Schedule C and you do not have to itemize.
Your Business Expenses (from the part time job) should be deducted from your business income (from the part time job) on a schedule C.
The result from the schedule C then gets entered on your Form 1040
and gets added (or subtracted if there is a loss) from the adjusted gross income.
Personal expenses deductions go on schedule A.
If you’re an employee then you can only deduct unreimbursed employee business expenses if you itemize. If they take out taxes and you get a W-2 at the end of the year, you are an employee.
If you are an independent contractor and they don’t take out taxes and you get a 1099 at the end of the year, you can probably deduct your business expenses on a schedule C