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Business deductions rollover? 1099 v W2

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  • Business deductions rollover? 1099 v W2

    I started locums work December 2016, so only was paid ~$2,500 on my 2016 1099 work. I also had W2 work (same work as a physician, but for several offices as changed jobs twice in 2016). I had a lot of business expenses last year with needing a contract lawyer, paying tail insurance, advertising, as well as, typical CME related expenses (conferences, etc) and licensing expenses. These expenses far exceeded my 1099 income (expenses ~$11,000). I will be working my 1099 locums job through most of this year, as well as, continuing a regular W2 job.

    Am I able to roll over my net operating losses related to my 1099 private contractor/sole proprietor work?

    If so, do these losses then reduce my W2 tax liability for 2016 or do I carry the loss back or forward with the 1099 work? Do I need to fill out Form 1045?

    Is it typically better to do this (deduct business expenses from the 1099 job) than try to reach the minimum percentage required to deduct business expenses on W2 work (again I am a physician for both jobs, but locums work for 1099 and W2 for regular office employment)?

    I appreciate any thoughts on this!

     

  • #2
    First of all, are your expenses solely for your 1099 work? Or are they related to your W2 work, also? i.e. if you would have had the same expenses whether or not you did the IC work, I see no justification for deducting them 100% on your schedule C. Unless any of them are specifically for one or the other type work, probably the most reasonable allocation of expenses is proportionately, based upon revenue, i.e. if W2 revenue totaled $250,000, then $110 of expenses would go on schedule C and $10,890 would go on Schedule A subject to the 2% haircut.

    Of course, if you are filing your income tax return yourself, you don't know any better and you probably didn't really absorb what I just explained to you, in fact, you probably didn't even read my answer, and you will therefore deduct $11,000 on you schedule C which will offset your W2 wages so, no, you don't need to fill out a Form 1045. (Even though you didn't read this.)
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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