Independent contractor Expenses

[DrMoneyTails]

Hello all,

I am using Turbo Tax Self-employed version of their software ($89.99). They screen my credit and checking account for possible deductions and they identified my utility bills and some gas bills as tax deductible. I did use my car for commute for my IC job, and indeed used gas for that purpose. I also used my computer, Internet and therefore energy to work.

Can I, or should I, deduct those expenses? Turbotax selected my entire Utility bill for the months I worked as well as the gas I used those months.. Obviously I used energy in my house for personal purposes and the gas was not solely for my IC job.. How should I go about that?

[The White Coat Investor]

Commuting expenses aren't deductible. You can deduct the percentage of your electricity, internet, and computer used for work, but if you're an employee, it probably won't be over the 2% of gross income threshold required to actually get a deduction.

https://www.whitecoatinvestor.com/business-mileage-the-holy-grail-of-tax-deductions/

[jjandjab]

I have a side job doing teleradiology from home as an independent contractor and have a dedicated home office. I can deduct utilities, but only a percentage based on home office size/house size, so about 10%. You can't deduct the whole bill. And if you don't have a dedicated home office from which you do most of your work - say you work on site at a clinic and sign reports at home? - I'm not sure you should claim anything... But I'm sure others will weigh in

[jfoxcpacfp]

DrMoneyTails wrote:

I am using Turbo Tax Self-employed version of their software ($89.99). They screen my credit and checking account for possible deductions and they identified my utility bills and some gas bills as tax deductible. I did use my car for commute for my IC job, and indeed used gas for that purpose. I also used my computer, Internet and therefore energy to work.

Can I, or should I, deduct those expenses? Turbotax selected my entire Utility bill for the months I worked as well as the gas I used those months.. Obviously I used energy in my house for personal purposes and the gas was not solely for my IC job.. How should I go about that?

Click to expand...

Perhaps you used the descriptor "commute" in error? Not enough information to know.

Are you full-time IC? Do you have a home office? If either or both of these answers is "yes", you are doing yourself a disservice with Turbo Tax and by hiring yourself as a professional. With all due respect, please reconsider.

[DrMoneyTails]

I am not a full time IC. I'm in fellowship and did a few shifts as an IC. Not much income either; total 5200 for 2016. I don't have a dedicated home office, as I work in a clinic.

I guess I can't really deduct anything!

[DMFA]

DrMoneyTails wrote:

I am not a full time IC. I’m in fellowship and did a few shifts as an IC. Not much income either; total 5200 for 2016. I don’t have a dedicated home office, as I work in a clinic.

I guess I can’t really deduct anything!

Click to expand...

Any expenses that were not reimbursed that are needed for your job as a physician are deductible, including mileage *between* work sites.  If you went from clinic to your moonlighting site, those miles are deductible (like $0.50 per mile or so; the rate went down), just not to/from home.

White coat, board certification fees (not USMLE since those are "initial" licensing tests), state licensing fees, DEA license fees, new stethoscope, Epocrates or UpToDate subscriptions...all deductible.  Some people go to the extent of deducting their phone bill since they needed to use phone/data for the job...a bit of a stretch imo.  Ditto for personal computers that they do charting on.

[jfoxcpacfp]

DMFA wrote:

If you went from clinic to your moonlighting site, those miles are deductible (like $0.50 per mile or so; the rate went down), just not to/from home.

Click to expand...

54 cents in 2016, down to 53.5 cents in 2017.

Other expenses you listed - maybe a small amount, prorated between the use for "day job" and IC work. Unless you were board certified only to do IC work, in other words, you cannot deduct the full amount against your IC income. Same for the rest.

[Android]

Johanna, seeking further clarification on a question that I posed to WCI earlier.

Since medical licensing is separate from board certification, and since being board certified is not required to practice medicine (all one needs is medical licensure and a state license) or to practice within a specialty (i.e., being board eligible works, and some places will hire a physician even when not certified), wouldn’t initial board certification fees and expenses be deductible? It seems that the “Initial” accreditation component specified by Publication 17 is met by securing initial medical/state licensure. I am asking because I have 1099 income this year and I would like to deduct my expenses for board certification. I’m sure others have a similar question.

WCIs response was as follows:

I think you should look at Figure 12-1 in Pub 970 before deducting your initial board certification fees. It’s a little gray, but I think you can make a good argument to deduct initial board certification fees. Worst case scenario, you get audited, the auditor disagrees with your assessment and you pay penalties and interest on that.

[jfoxcpacfp]

I tend to side with WCI on this one. You have more expertise on what is required than do I and, were I preparing the return in question, I would go with your judgment and deduct.