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As an independent contractor, your daughter will simply report her income and expenses on Schedule C of her tax return. When tax time comes around, if she is comfortable working with tax forms then this is really something she can do on her own just by following the instructions for Schedule C. If she is not comfortable working with tax forms, then any tax firm such as H&R Block or similar agencies can file her return, so you would not need to incur the expense of an accountant.
Any expenses that your daughter has directly related to this job may be deducted against the income that she is paid. She will then only owe tax on the net amount after expenses. Her expenses might include such things as use of part of her home as an office or supplies that she purchases, licenses she holds, etc. As far as the computer that she purchased, she would claim a depreciation allowance each year as an expense for the next 5 years. As an example, if she paid $1,000 for the computer, then she would claim a deduction of $200 per year for depreciation for each of the next 5 years. This is assuming that the computer is used entirely for business. If it is also used for personal use, then she can only claim the percentage that it is used for business purposes.
As far as health insurance, she can simply purchase an insurance plan on her own as an individual. She would not qualify to purchase one as a company since she has no employees. The cost she pays for her premiums would be an allowed deduction on her tax return.
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Thank you mommak
She has lived in upstate NY until August then moved to NYC to start the job. How would she file as NYC has a seperate tax filing in NY. Does it depend on where her priomary residence is or is it where the money is being paid to her. If she is paying her own tax and living upstate for most of the year is it NYC tax or NY state tax form?
Hello again momma,
The NYC earnings tax will apply if the services she renders are rendered inside of NYC or if she is a resident of NYC.
If during the time she lived in upstate NY she worked from her home and did not work in NYC, then she would not owe NYC earnings tax on the income earned during that period of time. However, if she lived upstate but worked at an office in NYC, then the NYC earnings tax applies. And it will apply to all earnings she has now that she is a NYC resident.
Where is the office located that she actually performs this work?
I asked you to please tell me where the office is located where she actually goes to perform this work?
Hello again mommak,
If the office she is working from is located in Manhattan, then she will have to pay NYC earnings tax on her net income, regardless of where she lives or where her primary home is located.
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