SmartA$$:  For record keeping, get yourself a 3 ring binder and use dividers to create 4 sections: Section 1: Income. Write down every dollar that comes in, the date, and what it was for. This section should be fairly simple since it sounds like all his income will come in the form of commission checks from his "employer." This section is important so he can double check that his 1099 is accurate (mistakes on 1099-MISC forms are more common than you might think). Section 2: Expenses. Write down every dollar that goes out for anything that you think might be deductible. Make sure you write down the date & what it was for. Section 3: Mileage log Write down every trip that might be deductible, the total round trip mileage, the date, and the business purpose of the trip. Section 4: Receipts Keep your receipts to prove everything in section 2. You don't need these unless you get audited, but its a good idea to keep them all in one place. Cell phone, gas, and internet are not generally deductible. Cell phone is only deductible if you have a 2nd cell phone for business use only (in addition to a personal cell phone). Gas is not deductible if you take a mileage deduction for business mileage. If you do choose to deduct actual transportation expenses, you have to track every mile you drive in that car all year and every dime you spend, then prorate the total expense based on the percentage of miles that were business related. Remember that commuting from home to his job is not deductible business mileage. Home or mobile internet is not deductible because the IRS assumes you would have home internet anyway. If he's a sales rep who commutes to the same location every day, he probably will have very little in the way of business deductions.
2011-05-13 15:06:22

tro:  exemptions have nothing to do with 1099's that income is reported on Sch C and if the net amount(income less business expenses) is $400 or more you will also file Sch Se, calculate your self employment tax, approx. 13.3% of that net half of this is a credit to reduce your gross income when you have totaled you income, ie wages, interest, pensions, business income etc, then you apply your personal exemptions and standard(or itemized) deductions to that amount to reduce your AGI to a taxable figure you can call 1 800 829 3676 and request publication 334 to help you but if you plan to use your phone, internet, or computer for your business since it is also a personal item, you will not be able to claim any portion unless you get separate ones just for your business business use of one's home has to have exclusivity to be able to claim, it cannot be part personal, part business and as a sales rep you absolutely need to keep a log of your business miles to be able to claim them
2011-05-13 15:47:40

StephenWeinstein:  First, you do not "save" any of the money that you estimate will be needed for taxes. You must send the estimated taxes to the government, before it is actually time to do the taxes. See Form 1040-ES. Second, just because he took out something does not mean it actually was exempt. He might have done some things wrong. There are no circumstances under which all the phones in a house can be used for taxes. To claim any phone, there must be at least one phone that is not claimed. If there is only one phone, then no phone can be claimed. You also cannot use the gas that you burn to get from home to work or from work to home. However, it you go to more than one potential client/customer one the same day, without going home in between, then you can use the gas that your burn getting form one of them to another.
2011-05-13 16:14:25