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socrateaser,
Category: UK Employment Law
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I am thinking of becoming a freelance IT contractor, but I

Customer Question

I am thinking of becoming a freelance IT contractor, but I have heard the perks are no longer there in respect to tax deductible and dividends. Any guidance?
Submitted: 6 months ago.
Category: UK Employment Law
Expert:  socrateaser replied 6 months ago.

Hello,

Nothing has changed in the law. If you form your own corporation or LLC and you hold yourself out to the pubic to perform IT services, then you are entitled to deduct all expenses that are "ordinary and necessary" to "carrying on any trade or business." Int. Rev. Code Section 162.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, I receive nothing for my efforts in your behalf.

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Customer: replied 6 months ago.
Thank you. What about dividends? I believe the tax for this is now higher.
Expert:  socrateaser replied 6 months ago.

If you form an LLC, or an S Corporation, there are no dividends. All of your profits are passed through to you each year and taxed to you directly.

Hope this better clarifies my original answer. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

Expert:  socrateaser replied 6 months ago.

Wait a second...are you in the UK?

Customer: replied 6 months ago.
UK
Expert:  socrateaser replied 6 months ago.

Please ignore everything that I've provided. Your question was placed in a U.S. employment law category. I will ask customer service to move it to UK law.

Thanks again for using Justanswer!

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