0

I am working as a W-2 contractor, not as a 1099 contractor (i.e., pay quarterly). Are there any loopholes or write-offs that I should be saving receipts for?

  • Driving from location to location, gas, and maintenance.
  • Working from home paying for office space, square footage, utilities, etc.
  • Meals out for business.

If you can think of more, please let me know.

In other words, I am working as a W-2, but sort of like a sole proprietor. As a 1099 contractor you have the right to deduct all business expenses. As a W-2 contractor, what can I do?

  • 7
    If you get a W-2, you are an employee, not a contractor. As an employee you can't deduct mileage to/from your place of employment. What makes you thin you're a "contractor"? – D Stanley May 14 '18 at 18:08
  • 3
    @Fattie Note that as a 1099 contractor you're on the hook for self-employment tax which probably negates any benefit of additional deductions. – D Stanley May 14 '18 at 18:09
  • 2
    quite true, @DStanley - although you can deduct a hell of a lot of stuff (depending on your line of business) (and I mean, you generally "get more" on 1099, since they don't have to pay) – Fattie May 14 '18 at 18:46
  • 2
    @D Stanley: But if you're working as a contractor, you should be charging at least enough more per hour (or whatever) than an employee wage, in order to cover the cost of self-employment tax. And the value of other "benefits" employees receive. – jamesqf May 15 '18 at 4:05
  • 1
    @moojjoo There's a difference between an employee with a contract and an "independent contractor". If you want to go independent you can try that, but make sure you understand the consequences, including taxes, benefits, retirement, etc. – D Stanley May 15 '18 at 13:41
7

To be clear, if you are receiving a W-2, you are an employee, not a self-employed contractor.

Before the new tax reform law, it was possible to deduct unreimbursed employee expenses. These were expenses that you incurred as part of your job that your employer did not reimburse you for. Expenses eligible for deduction included tools and supplies, mileage (beyond the normal daily commute), home office expenses, etc. There were two big caveats to deducting these expenses:

  • The deduction was part of the itemized deductions. If you took the standard deduction, you could not deduct these.
  • You could only deduct expenses that were greater than 2% of your Adjusted Gross Income.

However, with the Tax Cuts and Jobs Act, this deduction has been eliminated beginning in 2018. In order to pay for these expenses tax free, you must be reimbursed by your employer. (Reimbursements are not considered taxable income.)

-3

Speaking of work expenses, they are non-taxable as reimbursements, here is a comprehensive article on what are they exactly: https://smallbusiness.chron.com/taxes-work-expenses-w2-employees-22603.html

  • Welcome to Money.SE. Unfortunately, your answer doesn't really fit the question above, as the OP is not being reimbursed by his employer for these expenses. In addition, the article that you posted is out of date and does not take into account the tax reform changes in 2018, specifically the elimination of the unreimbused job expense deduction. – Ben Miller Nov 27 '18 at 18:51

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.