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WebCPA
WebCPA, Accountant
Category: Finance
Satisfied Customers: 110
Experience:  CPA, CGMA. 10+ years experience.
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I have recently quite my full time job and have begun working

Resolved Question:

I have recently quite my full time job and have begun working per diem at several facilities in my town. I am paid an hourly rate and they with hold all taxes. What if any deductions can I claim/use to offset my tax debt at the beginning of the year.
Submitted: 2 years ago.
Category: Finance
Expert:  WebCPA replied 2 years ago.

Greetings,

You indicated they are withholding taxes, which leads me to believe you are employed as an "employee", and not an independent "subcontractor".

Is this correct?

Whether you are an employee or a subcontractor will depend on how I can best answer your question.

Thank you

Customer: replied 2 years ago.
Yes - I am considered an employee. I am just called to work when needed.
Expert:  WebCPA replied 2 years ago.

Thank you for your question, and prompt reply. I'll do my best to provide a complete and accurate answer. If you need further clarification please do not hesitate to ask me.

As an employee, your deductions are much more limited, unfortunately. You would generally not be entitled to any additional deductions over what you were previously taking as a full-time employee. Self-employed individuals (i.e. not an employee) have more options on what business expenses they can deduct.

That said, there are still some things to consider. If you've lost health benefits and must pay out of pocket now, you will need to include this cost on your Schedule A (itemized deductions). The deduction is limited but still include it in calculating your tax return. Additionally, if you travel to more than one facility in a day, you can take a deduction for the unreimbursed travel expense between the two facilities. The standard mileage rate is currently about 55 cents per mile so this can add up. Commuting costs are not allowed, so this would only apply if you travel to multiple job locations in a day. Keep a mileage log if this is the case.

All-in-all, your tax return will not be much different than it was previously. You will just have multiple W-2's now that you are employed by several facilities instead of one full-time employer.

I hope this helps and again, please don't hesitate to ask if you need further clarification.

Customer: replied 2 years ago.
That's what I was afraid of. I do have one company that I do contract work of - no taxes or anything with held. In that case I can take mileage, food?? This particular job I think is going to kill me financially because of self employment taxes. Any suggestions for how to off set that??
Expert:  WebCPA replied 2 years ago.

Yes, you can deduct any "ordinary" and "necessary" expenses related to that production of income. If there are any office supplies, or tools you need you could deduct those costs. If you need to invoice them you would need a computer, paper, ink, etc. If you have a home office (an area of your home used exclusively for business) you could take a home office deduction - refer to IRS Form 8829 for that. Keep track of your miles for the mileage deduction and any meals on the road or with clients. Self-employed health insurance receives a much more beneficial "above the line deduction" as opposed to a limited itemized deduction. If you need to contact this client via phone you could deduct a portion of your phone bill. If you need internet to remote into their computers you could deduct a portion of your internet bill. Basically think of any expenses related to this business that are both ordinary and necessary for you to do your job. Also, take a look at the IRS Schedule C as filed with Form 1040 to see all the expenses it lists. This will help you find some deductions you may not have thought of. The forms can be found on www.irs.gov. Or you could probably just google them.

I hope this helps!

Thanks again for using this service.

WebCPA, Accountant
Category: Finance
Satisfied Customers: 110
Experience: CPA, CGMA. 10+ years experience.
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