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  • Resident moonlighting with 1099

    I recently started moonlighting at an urgent care with 1099. My residency is w2 pay. I used to have 24000 standard deduction in tax. Can I write off anything on top of the standard deduction as I have started 1099? Like cost of scrubs, etc.

  • #2
    You are receiving 1099-NEC (non-employee compensation). That is considered business income. Even if just a sole proprietorship in your name, you will file Schedule C (Form 1040) Profit or Loss From Business (Sole Proprietorship). You can deduct any legitimate business expenses the same as any other business. If you are a just providing personal services in a moonlighting capacity, there are usually a minimal dollar amount of such deductions available.

    Commuting to or from your home is not a deductible business expense unless you have justification for a home office and then you will also be able to take the home office deduction. Travel to or from your W-2 employed location to the moonlighting location is always deductible. Your meals are not deductible unless you require overnight travel. If you have a business meal with the client, 50% is deductible. Certain fees, licenses, publications, etc... necessary for the moonlighting could be deducted 100% or otherwise dual use prorated.

    Purchase of equipment necessary* for the moonlighting work or the home office if justified can usually be deducted under Section 179. . Supplies, percentage of utilities (electricity, internet), etc... can also be deducted. *The reasonable standard applies. If it would help, an additional tablet, laptop, desktop, etc... could be considered necessary. However, the business use should be be at least 50% and if < 100% prorated.

    Reference IRS Publication 535 Business Expenses for all the arcane possibilities, most of which will not apply to your specific circumstances.

    You can adopt an employer retirement plan and make contributions subject to the applicable limits. Pre-tax contributions subject to the applicable limits are deductible on your personal Form 1040 and not on Schedule C.

    Also, if you are eligible for the qualified business income (QBI deduction) based on the taxable income phaseout. You are eligible for a QBI deduction on Form 1040. This will be 20% of your base QBI less 1/2 SE tax, any self-employed health insurance (SEHI) deduction** and any pre-tax employer retirement plan contributions.

    **Note: You are not eligible for the SEHI deduction if you are eligible to be covered under an employer group health plan of your or your spouse's employer regardless if actually covered.

    P.S. That's all I can think of off the top of my head.
    spiritrider
    Member
    Last edited by spiritrider; 11-30-2021, 10:28 AM.

    Comment


    • #3
      OP, you may be confusing the standard deduction with business deductions. They are independent of each other - you’ll still get the full std deduction (currently $25,100, I believe) in addition to the deductions listed by SR.

      Minor points of difference with SR’s excellent and comprehensive response:
      • Even if you have a HO for administrative activities, I don’t believe it is appropriate to deduct the cost of round trips to a single site of doing business, as this is your main place of work, and in the nature of “commuting” (SR, if you disagree, would seriously appreciate for you to convince me otherwise)
      • Business meals are 100% deductible through 2022 under the CARES Act.
      • I would also add that personal furniture and equipment “converted” to business use (such as a desk and chair in your home moved to the home office) can be deducted at the lower of FMV or cost (FMV = Fair Market Value)
      Welcome to the forum!
      Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

      Comment


      • #4
        I’m assuming you’ll have minimal true deductions. Maybe an unrestricted state license, DEA license, or something if your residency doesn’t pay for it. How much will you be making? I’d focus on putting as much into a solo 401k as possible.

        Comment


        • #5
          Originally posted by spiritrider View Post
          You are receiving 1099-NEC (non-employee compensation). That is considered business income. Even if just a sole proprietorship in your name, you will file Schedule C (Form 1040) Profit or Loss From Business (Sole Proprietorship). You can deduct any legitimate business expenses the same as any other business. If you are a just providing personal services in a moonlighting capacity, there are usually a minimal dollar amount of such deductions available.

          Commuting to or from your home is not a deductible business expense unless you have justification for a home office and then you will also be able to take the home office deduction. Travel to or from your W-2 employed location to the moonlighting location is always deductible. Your meals are not deductible unless you require overnight travel. If you have a business meal with the client, 50% is deductible. Certain fees, licenses, publications, etc... necessary for the moonlighting could be deducted 100% or otherwise dual use prorated.

          Purchase of equipment necessary* for the moonlighting work or the home office if justified can usually be deducted under Section 179. . Supplies, percentage of utilities (electricity, internet), etc... can also be deducted. *The reasonable standard applies. If it would help, an additional tablet, laptop, desktop, etc... could be considered necessary. However, the business use should be be at least 50% and if < 100% prorated.

          Reference IRS Publication 535 Business Expenses for all the arcane possibilities, most of which will not apply to your specific circumstances.

          You can adopt an employer retirement plan and make contributions subject to the applicable limits. Pre-tax contributions subject to the applicable limits are deductible on your personal Form 1040 and not on Schedule C.

          Also, if you are eligible for the qualified business income (QBI deduction) based on the taxable income phaseout. You are eligible for a QBI deduction on Form 1040. This will be 20% of your base QBI less 1/2 SE tax, any self-employed health insurance (SEHI) deduction** and any pre-tax employer retirement plan contributions.

          **Note: You are not eligible for the SEHI deduction if you are eligible to be covered under an employer group health plan of your or your spouse's employer regardless if actually covered.

          P.S. That's all I can think of off the top of my head.
          I’m always impressed with the ‘top of your head’.

          Comment

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