1099 Self employment tax questions?
1099 Self employment tax questions?
I had a regular job all year but I also worked as a freelance web designer and videographer all year (2007). I did lots of my work at home editing and designing. I made like $6,000 doing that the whole year. I did most of my work for 1 company and it was all contract work no taxes taken out just $20 an hour for whatever I did that was actually billable to a client. Anyway I have some tax questions.
1.Could I claim the mileage between my house and the office that I did contract work for? I went there anywhere between 2-5 times a week.
2.I lived in two places in 2007 which I always had a extra bedroom setup as my office so could a portion of my rent be deducted? Without my business I would have no real need for that extra room.
3.could my internet service be deducted since that was needed to work on my websites and upload videos to servers etc.
Answers:
bostonianinmo: 1. Yes, that's deductible as a business expense on Schedule C along with the rest of your business expenses. 2. You can take a deduction for a home office if it is used EXCLUSIVELY for business use. ANY personal use would kill the deduction, even the occasional personal e-mail, recreational use of the computer there, or the occasional overnight guest. The deduction is based upon the area of the office compared to the the are of the residence. A 150 square foot bedroom in a 1,500 square foot home gets you a 10% deduction of your costs. 3. Generally only if it's a dedicated internet line for business use only. The IRS treats an internet connection the same way that they treat a phone line, assuming that you'd have it for personal use anyway rendering the basic monthly charge non-deductible. However, if you purchased a premium business-class internet connection, such as one with a fixed IP address and additional upload bandwidth needed for pushing large video files, then you could deduct the additional cost of the business-class connection over that of a standard consumer-class connection. For example, in my area the standard consumer-grade cable modem internet service uses dynamic addressing and has 8 meg download and 512k upload bandwidth for $39.95 per month. A business-class connection with 8 megs both ways and 8 fixed IP addresses costs $199.95 per month. If I could substantiate a reasonable business need for that connection (you could easily, IMHO, pushing video files) then I could deduct the difference of $160 per month as a business expense.
2008-02-10 06:44:30