One of the differences between filing a 1099-MISC form as opposed to a W-2 form, for your Idaho Falls tax prep, is that you are able to claim any deductions that the IRS deem necessary and relevant for your work. If you are required to drive for the type of work you do, you will be able to write off your gas mileage for that year. As of 2016 the IRS will pay for 54 cents per mile for business purposes and 19 cents per mile for moving or medical reasons. You will want to keep a mileage log so that when you do file your taxes this information is readily available to you. Taking detours along the way, to the gas station or a department store are things that you won’t be able to write off, so make sure that your log is accurate and you're not giving false information.
The IRS will only deduct ordinary and reasonable work expenses from your taxes. For example, if you need to travel to Las Vegas for work you can deduct things like your hotel and flight for your business, but probably not the Cirque Du Soleil show you go see. If your deductions equal or are less than $5,000 dollars you can use the shorter Schedule C-EZ form, anything above $5,000 you will want to use the Schedule C to file your claims.
Staying organized is key when filing your taxes as an Independent Contractor. Clients will not withhold taxes for Medicare or Social Security when they pay you, so it is your responsibility to make sure you have money saved to pay for these. These expenses will be on your Schedule SE form, which must be attached to your taxes. You are required by the IRS to pay these, so keeping money out for these expenses when tax season does come around will be crucial. Depending on how much you make within the year, how you file your taxes, and the tax withheld from other sources of income will determine if you are required to make up to 4 payments of income tax to the IRS within the year instead of just one. Being prepared by saving from each of your checks will make this a lot easier if you are in fact required to pay more than once in a year. Using a 1040-ES form will help you to determine if you are required to pay in more frequently.
To calculate your taxable income you will need to take your total self employment income (this can include other income that is not included on your 1099-Misc ) and subtract your total deductible income. This will be calculated with your other combined earnings and transferred onto a 1040 form to help you find out your final net profit for that year.
Next: What Deductions Can You Claim When You File 1099
