Tips For Tax Season: Independent Contractor Tax Deductions
Written by Alyson Aiello on October 30, 2017
One of the questions we hear from people interested in becoming Wine Guides is, “What kind of taxes will I have to deal with, and will I get to write anything off?” Sound familiar?
Our Wine Guides are classified as independent contractors, and as such, they have the fantastic benefit of being able to deduct from their taxes. We asked some of them for suggestions about possible write-offs and strategies that we then compiled into the below tax-related tips. Take a look and see how their experiences can help you!
One important note: We’re not tax professionals, so please consult your accountant or other tax advisor to make sure these tips about independent contractor tax write offs are appropriate for your individual tax situation.
1. Save your receipts.
Wine Guides were quick to mention this tip, which tops the list of independent contractor tax deductions. Keep receipts for everything you purchase to generate income—including receipts for wine purchased—as “research and sampling.” Just use your good judgment for what qualifies as research.
Wine Guides also suggested the following practical ways to manage receipts:
- Keep monthly folders of receipts to save time at tax season.
- Add each month’s receipts to an ongoing spreadsheet that spans the year.
- Use apps like NumReceipt and Dropbox to collect images of receipts and compile them into categories, so you have an easy-to-access digital file of your expenses.
2. Track your mileage.
Those trips you make in your car for Wine Guide-related events can, for the most part, be deducted if they’re properly tracked. Record all mileage associated with business activities, including things like:
- UPS pickups
- Grocery trips to buy pairings and supplies
You should also record your beginning and ending mileage for the year. Several Wine Guides suggested using the MileIQ app to streamline the process of tracking and recording mileage.
3. Know what you can deduct.
As an independent contractor, almost every expense incurred to generate taxable income that is ordinary and necessary for operating your business can be deducted. Our Wine Guides had a lot of great advice on this topic; here’s a snapshot of independent contractor tax write-offs you may be able to use:
- Conferences and meetings
- Internet, phone and utilities
- Printer ink
- Wine and food research around the world
- Gifts for customers, guests and hosts
- Home improvement to build a wine cellar
A word of caution here: Your independent contractor tax deductions list is specific to your situation—this should be used as a guideline and not tax advice. When you first get started as a Wine Guide, you should sit down with a tax professional and get advice on what the proper deductions look like for you, and continue to revisit them as your business grows and expands.
4. Separate your accounts.
To make preparation and filing easy at tax time, use a separate credit card and financial accounts for your Traveling Vineyard purchases and income. Having a designated account makes it easy to keep track of your monthly statements, profits, expenses and more.
5. Don’t wait until January to do your taxes.
Spending a few minutes at the end of each month organizing your receipts and forms and reviewing your accounts can save you a ton of time come tax season. By doing this, you can also be sure you’re getting the maximum in independent contractor tax write-offs, and not missing out on any deductions. To really stay on top of things, independent contractors often submit tax information quarterly.
6. Don’t DIY your taxes.
As Wine Guides and entrepreneurs, we often take the bull by the horns when it comes to learning new skills. However, taxes aren’t a good thing to tackle by yourself if you’re even a slightly unsure where to begin. When it comes to dealing with the IRS, it’s better to be safe than sorry—and that means finding a reputable tax professional who can help you with the ins and outs of independent contractor tax write-offs and filing. Don’t let the idea of hiring someone to help you with taxes scare you, though—a good partner will be able to explain clearly, help you find write-offs you may have missed, and save you money!