Tax Preparation – For 2023 – PT2
Did You Know?
Last month we talked about the difference between your earnings being reported to you on a W2, 1099-NEC, or no form at all, and we told you we would give you some tips for ways you might be able to reduce your tax liability.
When you receive a 1099-NEC or report your earnings without a form, a Schedule C will be generated with your tax return. This Schedule C is to show the Profit or Loss from a Business, and even though you are working for someone else, you are considered to be a self-employed/independent contract worker (which is why you are responsible to pay all of the payroll tax, 15.3% of your income, that we talked about last month). There are certain expenses that you can deduct if you keep track of them and have documentation (receipts or statements), and anything you can deduct will lower the amount on which they figure your payroll tax. Expenses may include things like the following:
• Car and truck expenses (if you are required to drive while on the job)
• Supplies or tools
• Certifications or license fees
• Clothing, shoes, and equipment required for and used only for your work
• A portion of your telephone and internet if required for your job.
There may be other things specific to your type of work that is deductible, so visit irs.gov and search for Publication 535 for more information, available in Spanish.
Next month, we will tell you how you can help us help you!
Certified Tax Preparer and Site Coordinator for Lowcountry Area VITA Coalition
United Way of the Lowcountry partners with the IRS to sponsor the Volunteer Income Tax Assistance (VITA) program which is staffed by trained and certified tax preparers who will accurately prepare your return, answer your questions, and electronically file your return, all for free.