The ‘Great Resignation’ was a major talking point in 2021, with many people leaving their jobs for better working environments or work-from-home opportunities.
TheStreet and TurboTax, a leading tax advisor, are partnering to help you through the self-employment transition.
In the video above, Lisa Greene-Lewis, a certified public account (CPA) and TurboTax expert, answers questions about self-employment taxes, tax forms, and more.
Self-Employment TaxesFiling requirements. If your net income is $400 or more, then you need to file a tax return because you have to pay self-employment taxes. Tax forms. Form 1099-NEC (formerly Form 1099-MISC) reports any income $600 or more that you made. Schedule C. All of your income, as well as your deductible expenses, will be on a Schedule C, filed alongside your personal tax return. Self-Employment DeductionsStarting your own business. If you started your own business, you can deduct start-up costs, marketing costs, items for your office like equipment, furniture, and more.Home office deduction. The home office deduction is a portion of your home expenses, like your mortgage interest, your rent, your utilities, and your property taxes. Vehicle. If you drive your own vehicle for your business, whether you’re delivering products, supplies, or you work a side gig as an Uber driver or Lyft driver, you can deduct your vehicle expenses. The deduction can either be your mileage or your actual expenses.Quotes | Quitting Your Job? Here’s How to Approach Your TaxesFull Video Transcript Below:Tracy Byrnes: So the great resignation was a thing in 2021. A lot of people decided to make changes, whether it be for family time, work-from-home opportunities, or, quite frankly, better working environments. And so what happens now when you go to file your tax return after potentially leaving your job? Lisa Greene-Lewis, CPA and TurboTax expert, is here with us right now to help us through this. A lot of stuff people need to think about. While on one hand, it’s very cool to be entrepreneurial. On the other hand, a lot of this paperwork now falls into your lap, right, because now you have to file as a self-employed person.
Lisa Greene-Lewis: Yes, so you do have to file. If your net income is $400 or more, then you need to file a tax return because you have to pay self-employment taxes. But regardless, when you’re self-employed, if you’re making any money, you should claim that money.
Tracy Byrnes: For sure. So what forms now, should people be looking out for?
Lisa Greene-Lewis: Yes, so they should be looking out for 1099-NEC, that’s fairly new. It used to be the 1099-MISC, but now it’s the 1099-NEC, and it reports any income $600 or more that you made. Also, all of your income, as well as your deductible expenses, will be on a Schedule C. And that will be filed with your personal tax return.
Tracy Byrnes: Right and actually, the expenses part is where it kind of gets exciting because as a w-2 employee, you can’t write off all the things that come out of your pocket. So now that you’re self-employed and you’re potentially starting your own business, what are some of the things that people could take as an expense on their Schedule C?
Lisa Greene-Lewis: Yes, so you can take start-up costs, marketing costs, definitely things for your office if you bought furniture. And then you get that home office deduction, which is a portion of your home expenses, like your mortgage interest, your rent, your utilities, and property taxes. So that’s a big one you don’t want to miss. And then also, most self-employed jobs you might drive your car for your business, whether you’re delivering products, supplies, or you work a side gig as an Uber driver or Lyft driver, you can deduct your car. Either your mileage or your actual expenses. And one thing people are always surprised about is if you purchase an SUV, you may be able to deduct about $26,200 on that SUV for the first year you put it in place.
Tracy Byrnes: Actually that’s something I didn’t even know. So let me ask you this, is there something or a way for people to walk through this? Does TurboTax offer something in particular for self-employed people because there’s a lot going on here?
Lisa Greene-Lewis: Yes, so we have our TurboTax self-employed product, and it looks for industry-specific deductions as well. There’s a lot of new industries out there, and it uses AI and machine learning. It gets smarter and learns these industries and serves up these unique expenses that people would never even dream that they can deduct. So they don’t miss anything.
Lisa Greene-Lewis: Yeah, that’s the thing. There’s a lot of things that you’re not thinking of that you should take because you deserve to get your tax bill down as much as possible. Lisa Greene-Lewis, CPA and TurboTax expert, thank you for all that.
Lisa Greene-Lewis: Thank you.
Editor’s note: Video produced by TheStreet’s Zach Faulds