PDA

View Full Version : Working as contractor, question about some expenses



ketanco
06-04-2012, 09:37 AM
Hello,

First of all this is my first post here and I want to say hi to everyone.

Here is my question...

I am an engineer and currently working full time as a contractor in a big firm, say company A. I am actually getting my checks from a staffing firm. So the supervisor in company A approves my timesheet every week, and i send it to the staffing firm, and they write my checks. the staffing firm sends me W2, and they withold my federal , state taxes etc... but i dont have any employee benefits such as vacation, 401k, health insurance etc.. whatsoever.

1-now my question is, when i do this kind of work, can i deduct my expenses such as transportation costs to and from the work place? and other similar expenses, directly related to this work? what other kind of expenses do you think i can deduct?

2-if the answer to #1 is yes, do these expenses in total need to be larger than my standard deduction in order to be worth deducting it? in other words, if my standard deduction is more than the total of these expenses, is it not even worth mentioning those expenses?

3-I have an LLC business too, which is an internet based business with no employees, which is totally irrelevant to the contracting work i am doing. It is based on a few websites that brings me a little income on the side, and all I do for that is to update my websites sometimes in my free time thats all. That LLC business and my working as contractor somewhere is totally independent from each other correct? i do schedule C for my LLC business.

vangogh
06-05-2012, 01:01 AM
Welcome to the forum ketanko. I'm not an account or any kind of tax export so don't hold me to any of the following. Hopefully I'll help keep this thread relevant so those who can answer better will be more likely to see it.

I think to deduct expenses it depends on which forms you fill out. I also fill out a schedule C and that's where my deductions go. I found this on the IRS.gov site (http://www.irs.gov/taxtopics/tc511.html) about business travel expenses and it links to 3 forms commonly filled out, one being the 1040 A, which might be the one you want. I do think your combined deductions would need to be bigger than the standard in order for them to be worthwhile, though the only way to know is to check the forms one year and see. You could also give Turbo Tax a try one year and see.

I'm not sure how LLC taxes work. I think you have some flexibility in being taxes as a corporation or an individual so they aren't automatically separate, but maybe could be. I won't say any more about LLCs since I'm pretty sure I'll give you some bad advice if I do. I'll let those with more expertise answer.

Hopefully something in there helps and hopefully those who know more see this thread.

ketanco
06-05-2012, 07:46 AM
thanks vangogh but yes i still need answers to most of my questions. Can someone answer if he knows the answer, especially to question 1? thanks

vangogh
06-05-2012, 10:33 AM
We do have some people here who'll be better able to answer, though they don't check in every day. I'm sure if we keep the thread active they'll see it when they're next logged in. Did you check the page I linked to above? It looks like it covers most everything you need to know about travel deductions.

Evan
06-05-2012, 09:20 PM
Sorry, I had typed a response the other day, but it didn't go through.

#1 - No, this is a commuting cost that is not deductible.
#2 - If they were deductible, yes, you'd have to itemize your deductions. Further, these costs need to exceed 2% of your adjusted gross income. So if your AGI is $50K (bottom of your 1040), you need at least $1,000 in expenses before even $1 is deductible. So if you have $1,500 in mileage, less the 2% "haircut", you only have a $500 deduction. Not really generous at all. But in all cases, commuting costs are not deductible.
#3- Yes, these are totally independent. So if you decide to meet with me as a contractor, you could probably deduct your mileage from your house to mine (of course we'll assume that we're not on opposite sides of the country -- but you get the point).

ketanco
06-05-2012, 10:41 PM
Sorry, I had typed a response the other day, but it didn't go through.


#3- Yes, these are totally independent. So if you decide to meet with me as a contractor, you could probably deduct your mileage from your house to mine (of course we'll assume that we're not on opposite sides of the country -- but you get the point).

I didnt understand your answer to this one. You said commuting costs are not deductible for contractor work, but now you are saying mileage is deductible which is commuting. Can you explain this one a little if possible?

BNB
06-11-2012, 11:28 AM
You need to talk to your accountant, if you don't have one, get one.

That being said, it sounds like you are NOT contracting in a tax sense, you are an employee. As Evan said, this would then mean your travel expenses are commuting.

You may want to consider asking the staffing company if they can put you on 1099 as a contractor. You don't get benefits anyways so I don't see any real benefit to being an employee of the staffing company. And just to reiterate, not getting any of those benefits doesn't change your status as an 'employee' or contractor, it doesn't mean anything other than you are an employee for a company that offers no benefits. If you are a contractor in a tax sense, then you could absolutely deduct all kinds of expenses involved in doing the job. But again, get an accountant who can manage this for you!

It sounds like you are legitimately offering contracting services and the tax savings alone could be well worth speaking to an accountant about to make sure you do it right and by the book.

ketanco
06-12-2012, 04:59 PM
yes, may be with 1099 i can, i will check on that. thanks..

Evan
06-12-2012, 06:15 PM
I didnt understand your answer to this one. You said commuting costs are not deductible for contractor work, but now you are saying mileage is deductible which is commuting. Can you explain this one a little if possible?

Commuting mileage is not deductible. If you're an employee with a permanent work location, your travel back and forth to this same location over and over is "commuting". However, if you have a new place you're going to, which is temporary, in theory you can say that you're "commuting" there, but it's not commuting mileage as it isn't a travel location where you have recurring travel. If you're going to a temporary place (e.g. not permanent work office), then the mileage is deductible. If it's to your work office, then it is not deductible.

jamesray50
06-13-2012, 09:50 AM
Hi Ketanco - As an employee, driving to and from work are not considered mileage expenses, however, travel during the day from one job to another are. Have you asked your employer to reimburse your mileage expenses? Most employers will pay the standard mileage rate.

huggytree
06-13-2012, 10:15 AM
#1...nope

my union rules DO get me mileage from the employer if you drive to more than 1 jobsite....so the drive to start and the drive to go home you get nothing...but if you drive to multiple job sites then you can submit your mileage to the employer to get reimbursed....i used to get $50 a month or back in the day..

so id check with your employer.....maybe they have some program for it....or if your union id call the union to see what the union rules are....

if there isnt a union id assume your gonna get $0