Listen to this article
Written by: Derek Davis, Co-Founder of Tabby
1099 Independent Contractors pay more tax than the typical W-2 employee.
In addition to personal income tax, an Independent Contractor will be responsible for Self-Employment tax which is taxed at 15.3 percent of net earnings. To lower the amount of taxes that an Independent Contractor must pay, their best friend is their business expenses.
According to a recent poll done by GoodApril, an Intuit company, approximately $7.5 Billion are missed in tax saving opportunities by 1099 Independent Contractors. When looking into this, it become apparent that the reasons for missed tax saving opportunities is because keeping track of business expenses is such a pain.
We recently conducted a poll of Uber and Lyft drivers and found that 65 percent of drivers either kept manual entry of their expenses or did nothing at all. The findings lead us to research deeper into the IRS Publications surrounding business expense documentation.
According to IRS Publication 583: Starting a Business and Keeping Records: Except in a few cases, the law does not require any specific kind of records.
To support a business expenses, it must contain the following criteria:
1. Name
2. Date
3. Amount
4. Essential Business Characteristic of Expenses (e.g. why did you purchase it).
From this, we came up with Tabby, a mobile app that helps 1099 Independent contractors connect their debit and credit cards and easily “swipe” if the expenses are business or personal (big-ups to Tinder). By keeping track of all your expenses, some of the feelings of being confused are alleviated, and we will guarantee that you will never miss a tax deduction or feel like you’re overpaying taxes. The moment you swipe a transaction as a business, the less taxes you’ll pay.
Activate Social Media:
