Maximize Your 1099 Tax Savings and Boost Your Earnings
Shared Economy CPA specializes in tax savings and finances for 1099 Contractors. When you rent a car for personal reasons, the expenses cannot be deducted on your tax return. However, as an Animo driver, the primary use of the rental car is for your rideshare business. As a result, you may be eligible for certain tax deductions. Here are some tips to help you maximize your earnings as a 1099 contractor.
Deductions for Animo Drivers
Since Animo covers mileage, fuel and maintenance for your vehicle, you are not permitted to include these expenses as itemized deductions on your tax return. However, you are allowed to take a full deduction for your Animo rental fees.
What other deductions can I take?
Although your deductions from using Animo are limited, there are other deductions that you may take as a self-employed business owner, including:
Tax Preparation Fees
When you use a CPA or buy tax software in order to prepare your taxes, you can deduct these costs from your business earnings.
As a 1099 contractor, you are responsible for paying for your own healthcare insurance. You can deduct medical, dental or long-term care insurance premiums that you pay for yourself, your spouse or children/dependents from your taxable earnings.
As a new business owner, you are allowed to deduct up to $5,000 in business start-up costs for the first year that you are in business. For start-up costs that exceed $50,000, the $5,000 deduction is lowered by the amount in excess of the $50,000 and any additional costs must be amortized.
Cell Phone Fees
The cost to purchase a cell phone and your cell phone bill are 100% deductible if it is used to manage your business. If you use your phone for both personal and business use, you are permitted to deduct a percentage of the costs.
If you maintain a home office for the purposes of managing your rideshare business, you are permitted to take a deduction for the portion of use that is related to the business.
If you purchase any snack items, such as water, gum or other items for consumption by your rideshare passengers, you can take a deduction for the cost of these items.
You can deduct ATM fees, credit-card fees, bank charges, and transaction fees from your rideshare company (if included in a 1099 statement), from your taxable earnings.
If you have any questions regarding 1099 taxes and ways to save money and pay less tax, please reach out to the Shared Economy CPA.