Thread: Self employed tax question
03-10-2011, 02:12 PM #1
Self employed tax question
I just recently started doing service tech work as a contractor and have a tax question. The company I do work for pays $.50/per mile + billed hourly wage. My question is this, is the mileage compensation considered taxable income?
03-10-2011, 02:30 PM #2
I'm not a CPA but I believe it is taxable income. Since you'll have to pay the additional 15% 1099 self employment tax, you'll want to keep receipts & records of all your expenses like gas, vehicle maintenance/repairs, depreciation of equipment, loan interest & expenditures on new tools/equipment to help offset the higher tax rate. Itemizing your deductions will likely get you a smaller tax bill than taking the standard deduction. My best advice it to keep good records & talk to a CPA so you can take advantage of as many deductible expense writeoffs as possible.
03-10-2011, 05:07 PM #3
I think it is taxable but like the last person said, check with a CPA.
If you are going to be doing this long term, go ahead and form a business entity.
Either an LLC or a "S" corp. It doesn't cost that much to get one going and it has
huge tax advantages. Any expense you incure doing work can be run through the business. One other thing. If you are sub contracting for this other business, you probably need to get some liability insurance. One little accident can blow up into something huge and you could loose everything including your personal assets. That is another adavantage of forming an LLC or "S" corp.
You have a level of protection of your personal assets against things that could happen while you are working as a contractor. I don't know what type of work you are doing but anything can and usually does happen.
03-10-2011, 06:31 PM #4
- Join Date
- Apr 2006
- panama city beach 'fl
it's most likely going to show as income BUT you should be able to deduct mileage so should break even,not into tax laws but just went to tax people and that basic what they did,but every case is different
03-10-2011, 06:36 PM #5
03-10-2011, 08:42 PM #6
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