1099 employee tax advise

2 Replies

Hello BP members!

I am currently a loan officer and in the transition of working as a W2 employee to now being a 1099 employee. I am also working on my real estate license and plan on having it completed by the end of the year. I already have a brokerage that I will hang my license under. 

From my understanding, a 1099 employee is considered a "contractor" and are able to itemize deductions when it comes to taxes. My question that I have for any tax professionals or any other 1099 employees is what are some of the main business expenses I am able to deduct? Phone, car, mileage, computer, health insurance etc.? This is one link that I did find helpful. 

I also need to know when I am able to start deducting these expenses? Am I able to right away, or once I start earning income as a 1099 employee? Will all business expenses from the beginning of the year qualify for a tax deduction or only from the time I started as a 1099 employee? 

I also remember being asked if I was a RE professional last year when I did my taxes. What qualifies you as being a RE professional? 

All feedback is appreciated! 

Thank you in advance!

Marshall 


The link you have is a very good starting point.

I'm not a tax professional but I can make a few comments. 

Receiving a 1099 for real estate services would probably qualify you as a RE professional. 

I don't remember the numbers but it is something like you have to show a profit in two of your first five years or the IRS may disallow deductions. You don't have to show a profit before establishing that you are a RE professional but having no gross income doesn't seem likely to succeed. 

If you have employer sponsored insurance you probably can't get a deduction for additional individual insurance. Self employed (contractors) can almost always deduct their health insurance costs.

It would probably be worth your while to talk with a tax professional to get set up with the appropriate record keeping guidelines and knowledge about the best way to deduct expenses.