Anyone else technically an independent technology contractor?

[obeseotron]

So I took a new job, for the first 6 months I am technically not an employee, but an independent contractor paid through an outside agency. I had expected said agency to pay me with normal taxes being deducted from my paycheck, but when I got my first check, every penny was still there. I've come to find out I'm technically an independant contractor, which means I have to pay both ends of my social security and pay my taxes in a lump sum at the end of the year. This sucks in my opinion, but someone at work (whose knowledge of tax law I don't totally trust) mentioned that I would be a 1099 and could deduct all kinds of things like transportation, lunch, and any purchases that could related to my job function.

Anyone else in a similar boat? If I buy parts and build a new PC, can I write that off as a business expense provided I use that PC to in some way train myself about things related to my job, ie testing out Vista or having enough RAM to run virtual machines to learn about networking.

 

[NuAlphaMan]

Well, the person was right. You can write off things as a business expense, but you need to be able to prove the things you are writing off are for your business. Talk to a tax person and they can direct you.

Also, you should look at incorporating your business. In most states, it's not that expensive.

As for being 1099, make sure you save 10 - 20% of the money you're receiving to help pay the taxes you have to pay. This way, you won't owe as much (because you will have some of the money) or you will have to much and have some left over.

 

[RU482]

If you were the agency, then yes. But, since you work through a contract house, no.

 

[Fern]

Originally posted by: obeseotron
So I took a new job, for the first 6 months I am technically not an employee, but an independent contractor paid through an outside agency. I had expected said agency to pay me with normal taxes being deducted from my paycheck, but when I got my first check, every penny was still there. I've come to find out I'm technically an independant contractor, which means I have to pay both ends of my social security and pay my taxes in a lump sum at the end of the year. This sucks in my opinion, but someone at work (whose knowledge of tax law I don't totally trust) mentioned that I would be a 1099 and could deduct all kinds of things like transportation, lunch, and any purchases that could related to my job function.

Anyone else in a similar boat? If I buy parts and build a new PC, can I write that off as a business expense provided I use that PC to in some way train myself about things related to my job, ie testing out Vista or having enough RAM to run virtual machines to learn about networking.

You may want to post this over in the Annual Tax Time thread. You're basically asking a tax question and so tyhi swill prolly get locked (as others have).

I'm a tax CPA. If you're an independant contractor (an unincorporated) you should receive a Form 1099 from whomever is paying you (client/customer).

You will complete Schedule C to report your income & expenses from your business. This will be attached to your Form 1040.

And yes, it does open up the possibility for you deduct the many business related expenses you will/may have.

Yes, if you build a PC and use it in business (especially if you claim 100% biz use) you can "deduct" the cost. Since it's equipment that will have a useful life beyond 1 yr it s/b depreciated over several yrs. However, you may elect section 179 (code section # Internal Revenue Code) and dedeuct the entire cost immediately.

I really think you should see a CPA, or get ready to spend a lot of time studying up on tax law

Fern