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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I am contracted by another individual who actually works for

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I am contracted by another individual who actually works for an I nsurance company. I receive monthly commission checks from him with out taxes taken out. Am I basically self employed and what deductions can I claim. I haven't keep too many receipts except job hunting expenses, donations to charaties, pulications, prescriptions and doctors which I don't beleive work up to the percent you need to be deductableeven on commissions whicj total 11,000$. I donated to the church. What else can I deduct without receipts, milleage? I worked out of my home but I think that's it. Am I forgetting anything?
Hello blondy,

Given the employment situation you have described, the insurance company is treating you as a self employed individual. What that means is that you will be responsible for payment of your own taxes each year, including federal and state income taxes, plus the full share of SS and Medicare taxes.

You will report your income from this employment on Schedule C which is used by self employed people. On that same Schedule C you will report any expenses you had in connection with your employment.

Some of the expenses which you have listed do not pertain directly to your employment. Expenses for job hunting, donations to charities and medical expenses would all just be part of your itemized deductions on Schedule A. You would be allowed to claim these same deductions even if you were employed at a regular job where they withheld taxes from your checks, assuming you have enough deductions to itemize.

For the tax year 2009, the IRS will allow single taxpayers a standard deduction of $5,700 and married taxpayers a standard deduction of $11,400. If you have enough deductions which exceed those amounts, then you have the choice of itemizing your deductions on Schedule A. However, expenses which you have in connectin with your self employment are separate deductions. They are not part of your regular itemized deductions.

Expenses that relate directly to your job would be things like mileage, business use of your home, cell phone that you use for business, cost of any business license you must hold, cost of business cards and office supplies you purchase, and things of that nature. These expenses which relate directly to your job would also be listed on Schedule C along with your income, and you would then be liable for tax on the net income after deductions.

The other deductions for donations and medical expenses and things of that nature would still be claimed on Schedule A if you plan to itemize your deductions rather than take the standard deduction allowed by the IRS.

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Thank you blondy.

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