1099 Deductions - How independent contractors can pay less in taxes

A 1099 deduction refers to business expenses that self-employed individuals or independent contractors, who receive a 1099 form (like 1099-NEC or 1099-MISC), can subtract from their taxable income to reduce their tax liability. Since 1099 workers don’t have taxes withheld from their income, they pay self-employment taxes (15.3% for Social Security and Medicare) and income taxes, but deductions help lower the taxable

Key 1099 Deductions

These are common expenses you can deduct, based on IRS guidelines:

1. Home Office: Deduct a portion of rent, mortgage interest, utilities, or insurance for a dedicated workspace. Use the simplified method ($5/sq ft, up to $1,500) or actual expenses (based on business-use percentage)

2. Vehicle: Deduct business-related driving using the standard mileage rate (67 cents/mile for 2025) or actual costs (gas, repairs, etc., prorated for business use). Track mileage with a log.

3. Supplies/Equipment: Deduct costs for computers, software, or office supplies. Expensive items may be depreciated or deducted fully via Section 179.

4. Internet/Phone: Deduct the business-use portion of bills (e.g., 50% if half your internet use is for work).

5. Advertising: Deduct website costs, social media ads, or business cards.

6. Professional Services: Deduct fees for accountants, lawyers, or tax software.

7. Travel/Meals: Deduct 100% of

business travel (flights, hotels) and 50% of business meals. Keep receipts.

8. Health Insurance: Deduct premiums if you’re not eligible for employer-sponsored plans (up to net business income).

9. Self-Employment Tax: Deduct half of your self-employment tax on your personal tax return.

10. Education: Deduct training or courses that enhance business skills.

11. Retirement: Deduct contributions to SEP-IRA or solo 401(k) plans (up to $69,000 for SEP-IRA in 2025, income-dependent).

How to Claim Deductions

- Report income and expenses on Schedule C (Form 1040).

- Keep records (receipts, invoices, mileage logs) to substantiate deductions.

- File quarterly estimated taxes to avoid penalties, as taxes aren’t withheld.