With the new 1099 from Paypal, I am up to my ears in trying to maximize my deductions. Many of my shop days are spent driving around all day from shop to shop and I wonder if I can deduct lunches and coffees for these days. What does everyone suggest? And maybe suggestions for deductions that I am overlooking.

These are small, but I just remembered that I had purchased them in 2024 and added them in: airpods and portable charger. I prefer to make my pre visit phone call using airpods for clarity of sound. I also do not want the call to come through the bluetooth of the car if I am sitting in my car. My schedule C is small beans compared to most people. I also deduct any office supplies such as my paper calendar, printer paper, pens. I also deduct a portion of my cell phone. Im sure I am listing all of the obvious things.

I live in a state that has required PayPal to send a 1099K for a couple of years now. There is [n]nothing[/n] different from what you are legally required to do, then if you had not gotten a 1099 from PayPal.

I realize it is a complete cluster the way things are done, which is why having well-organized records is key. Any income shown on the 1099K for which is duplicated on any 1099-NECs you received, can be deducted on Part V (Other Expenses) of Schedule C. You simply total up what is duplicate, write in the amount, and on the line next to it write something like, "Duplicate Income Already Reported from 1099-NECs." Of course, PayPal's 1099-K, unlike most of the 1099-NECs, will include your reimbursed expenses because PayPal does not know what amount you were paid are fees and what are reimbursements. So total up all your reimbursements and put that down on Part V of Schedule C, noting that it represents "reimbursed expenses." If you have reimbursements from RQA, who in the past has included reimbursements on their 1099-NEC, you'll include those totals on that line as well. Ideally, PayPal automatically correctly classified payments from family and friends. If they have, then those amounts should not be on your 1099-K. If they are, then you need to contact them and let them know what payments have not been classified correctly, and ask them to correct the 1099-K.

As far as other expenses, you cannot legally deduct meals and coffee if you left home and came back on the same day.

Are you writing off your business mileage?

I deduct 25 percent of my total cell phone bill, Internet bill, I have a small amount of square footage for home office because I do use my computer and printer for this.

Gas mileage, office supplies, for the ty jobs I bought latex gloves and Lysol wipes so cleaning supplies.

I am not sure about the coffee. I thought the rule for deducting meals was it had to be with someone and you had to discuss business over the meal. I try to "recruit" a family member or friend at least once per month.

The H&R Block tax prepper I spoke to said that home office claims are a big red flag for the IRS. But, she also figured my taxes owing about $2,000 and, when I did it online I owed nothing. So take it for what it's worth.

I claim a home office. It is a dedicated space (150 square feet of my 2600 square foot home). If the home office is legitimate and reasonable for the size of your Schedule C business, why would you not claim it? In all acuality, the work we do is confidential (despite what Kayla may think) and I have a dedicated space for recorded phone calls and to keep my printed instructions. I also have some other Schedule C work that I include that has a confidentialty component.

@sestrahelena wrote:

The H&R Block tax prepper I spoke to said that home office claims are a big red flag for the IRS. But, she also figured my taxes owing about $2,000 and, when I did it online I owed nothing. So take it for what it's worth.

Home office if needed/warranted.

If you have business cards that have annual fees, write those off.

Tax Accountant here for many years. You cannot deduct your coffee and lunches under those circumstances.

@jpgilham wrote:

Tax Accountant here for many years. You cannot deduct your coffee and lunches under those circumstances.

How about the Part B Medicare and insurance I pay?

I started deducting a part of my Medicare expenses a few years ago. As I shop part time and also do a lot of reimbursement shops where the fee is smaller my total income is not high enough to cover my Medicare and dental costs completely. I used to deduct some of those small items like tape and printing costs but since I started deducting medical and dental bills in addition to mileage and I want to leave some profit every year I dont bother with those smaller purchases. uote=Belle]
How about the Part B Medicare and insurance I pay?[/quote]

My husband is still working and his health insurance covers both of us and is free as he works for NYC. I do deduct my dental insurance. But my co-pays for medical and dental appointments and prescriptions sure add up. Can I deduct these co-pays on my Schedule C income? I added them up last year but our tax preparer only deducted the dental insurance payments.

@ebjny wrote:

My husband is still working and his health insurance covers both of us and is free as he works for NYC. I do deduct my dental insurance. But my co-pays for medical and dental appointments and prescriptions sure add up. Can I deduct these co-pays on my Schedule C income? I added them up last year but our tax preparer only deducted the dental insurance payments.

Medical expenses like copays would go on Schedule A. However, only the portion above 7.5% of your income can be deducted... and even then the standard deduction might be better than what you get frm Schedule A.

This is from H and R block. I was looking for it on the IRS site but this came up faster. I did not double check with the IRS [www.hrblock.com].
This is about deducting health insurance as a gig economy worker. or self employed.

do you need to provide receipts for such deductions?

@gene wrote:

do you need to provide receipts for such deductions?

You need to provide receipts only if you get audited. So hang on to any receipts you have. Only a small percentage of people get audited as long as what and how much you deduct does not send up a red flag.

Home office deductions are for a portion of your space that is used REGULARLY and EXCLUSIVELY for your business. If you use it for anything else (playing on the computer, your kid using your desk for homework, your husband works out football pools at your desk) or if you only use it for "business" to do your tax return ... you cannot deduct any of it. You can deduct a percent of your computer. But the home office has to be your OFFICE. Where you go to WORK.

Hey @ebjny I have a question..why haven't you "up to your ears" trying to find and documenting tax deductions all along?

Hey @sandyf the information you posted about the deductibility of health insurance is correct, but it is incomplete for many MSers.

If MSing/gigwork/sidehustle self employed stuff is the entirety of your earned income, then you can deduct your health insurance premiums (including Medicare premiums) for you and your spouse in the appropriate place on your tax return. BUT...

If MSing/gigwork/sidehustle stuff is just supplementing your income and you have a regular job as your primary income, AND you get your health insurance through your primary employer, then you CANNOT deduct your health insurance premiums.

Why are you yelling and who is watching us inside of our homes? The IRS has bigger fish to fry...

@azsrshopper wrote:

Home office deductions are for a portion of your space that is used REGULARLY and EXCLUSIVELY for your business. If you use it for anything else (playing on the computer, your kid using your desk for homework, your husband works out football pools at your desk) or if you only use it for "business" to do your tax return ... you cannot deduct any of it. You can deduct a percent of your computer. But the home office has to be your OFFICE. Where you go to WORK.

@azsrshopper wrote:

Home office deductions are for a portion of your space that is used REGULARLY and EXCLUSIVELY for your business. If you use it for anything else (playing on the computer, your kid using your desk for homework, your husband works out football pools at your desk) or if you only use it for "business" to do your tax return ... you cannot deduct any of it. You can deduct a percent of your computer. But the home office has to be your OFFICE. Where you go to WORK.

I don't think the IRS is going to worry too much about the lousy 50 square feet I claim for a home office. I do all of my spreadsheet work there, I plan my routes, I print out my guidelines, I use it for work. Who is going to know if I play a game of solitaire on my computer!

Your response to what I quoted is a good time to remind everyone here that any information you read anywhere on the internet or even told to you by a friend has to be checked out by you, the one using this information. There are exceptions to every rule and it is your job to make sure you personally fit the rule made by the IRS by looking it up your self to make sure your personal situations fits the rule. Or if you have a licensed tax preparer you can start there. Although in my experience some tax preparers are unaware of some of the less frequently used IRS rules so if you hear about one of those that seems to fit you, do some more research before using it on your taxes.

@teacherguy wrote:

Hey @sandyf the information you posted about the deductibility of health insurance is correct, but it is incomplete for many MSers.

If MSing/gigwork/sidehustle self employed stuff is the entirety of your earned income, then you can deduct your health insurance premiums (including Medicare premiums) for you and your spouse in the appropriate place on your tax return. BUT...

If MSing/gigwork/sidehustle stuff is just supplementing your income and you have a regular job as your primary income, AND you get your health insurance through your primary employer, then you CANNOT deduct your health insurance premiums.

This is not a political post. With the IRS now included in the goverment staff reductions, we will be dead
before they even have an opportunity to think about auditing our returns. I'm not saying cheat on your taxes just that it has been painful to correspond with the IRS since COVID and now its going to be a clusture f ++.

In these cases, I think the IRS may go ahead and make the adjustment for you and send you a letter to contact them within a period of time to dispute.

Ha Ha Zek, I read political point of view all over your post. On most polls about the effect of political decisions these past four weeks the pollsters are still finding half the population , give or take a few percentage points, interpreting political moves one way and the other half having a totally different point of view. I think I can guess your side based on what you said. quote=Zek]
This is not a political post. With the IRS now included in the goverment staff reductions, we will be dead
before they even have an opportunity to think about auditing our returns. I'm not saying cheat on your taxes just that it has been painful to correspond with the IRS since COVID and now its going to be a clusture f ++.[/quote]

Sandy F,

My single point is that the IRS was already understaffed and now it will be even more challenging for taxpayers. Just a reality. Nothing more.

@sandyf wrote:

Ha Ha Zek, I read political point of view all over your post. On most polls about the effect of political decisions these past four weeks the pollsters are still finding half the population , give or take a few percentage points, interpreting political moves one way and the other half having a totally different point of view. I think I can guess your side based on what you said. quote=Zek]
This is not a political post. With the IRS now included in the goverment staff reductions, we will be dead
before they even have an opportunity to think about auditing our returns. I'm not saying cheat on your taxes just that it has been painful to correspond with the IRS since COVID and now its going to be a clusture f ++.

[/quote]