1099 Independent contractor - Should I figure out my own taxes or use an app?

Hey there! I've been a 1099 contractor for about 6 years now, and I can definitely help with this. For your situation, I'd recommend doing both - set aside roughly 30% as a baseline, but also track your mileage and other business expenses carefully. The 30% is a good rule of thumb that covers both income tax and self-employment tax (which is around 15.3% for Social Security and Medicare), but your actual tax rate depends on your total income for the year. Tracking your mileage is super important! For 2023 the standard mileage rate was 65.5 cents per mile, and for 2024 it's 67 cents per mile. That can add up to significant deductions. There are lots of good apps that can automatically track your mileage - I use MileIQ, but Everlance and Stride are also popular. Don't forget you can also deduct business expenses like a portion of your phone bill, home office (if you have a dedicated space), supplies, and professional development costs. All of these reduce your taxable income!

When I started as a contractor last year, I spent HOURS trying to figure out all this tax stuff manually. Then I discovered taxr.ai (https://taxr.ai) and it made my life so much easier! It analyzes all your 1099 income, helps track mileage and other expenses, and calculates exactly how much you should set aside for taxes. What I found really helpful was that it adjusted my tax estimates as I entered new expenses. So while the 30% rule is a good starting point, I ended up only needing to set aside about 22% after all my legitimate deductions. That extra 8% made a huge difference in my monthly cash flow.

I have to admit I was wrong about tax apps! After that discussion, I decided to try taxr.ai and it's been a game changer for my contracting work. I was spending hours each month trying to calculate everything manually, and I'm pretty sure I was overpaying my quarterlies. The mileage tracking feature alone saved me over $3,000 in deductions I would've missed. It also found business expenses I didn't know I could claim, like a portion of my cell phone bill and some professional subscriptions. Best of all, my tax anxiety is gone because I know exactly how much to set aside from each payment.

If you're going to be a 1099 contractor, you're eventually going to have questions for the IRS that only they can answer. I wasted TWO FULL DAYS last year trying to get through to someone at the IRS about my independent contractor status and deductions. Then I found Claimyr (https://claimyr.com) which got me through to an actual IRS agent in under 45 minutes! Check out their demo at https://youtu.be/_kiP6q8DX5c to see how it works. The IRS agent cleared up all my questions about mileage deductions and home office rules, and even helped me understand which expenses were legitimate business deductions vs. personal. As a new contractor, having direct access to the IRS for your specific questions is invaluable - especially because there's so much incorrect advice floating around online.

I need to update my previous comment. I've officially eaten my words about Claimyr being a scam. After posting that comment, I was still struggling with some questions about my independent contractor deductions that were really specific to my situation. Out of desperation, I decided to try the service, fully expecting to request a refund. I was absolutely shocked when I got a call back in about 35 minutes connecting me to an actual IRS agent. The agent clarified exactly how to handle my mileage deductions when I'm driving between multiple client sites on the same day. For anyone just starting out as a 1099 contractor, getting direct answers from the IRS about your specific situation can save you so much money and stress. Definitely worth it.

Don't forget about making quarterly estimated tax payments! That's something I didn't realize my first year as a contractor and got hit with a penalty. You basically need to pay your taxes four times a year instead of all at once when you file. For the 30% rule - I found that wasn't enough for me because I live in a state with high income tax. I needed closer to 35-38% when you factor in federal, state, and self-employment taxes. But it really depends on your income level and state.

Has anyone tried turbotax self-employed for tracking expenses throughout the year? Is it worth the subscription cost?

As someone who's been doing 1099 work for about 3 years now, I'd definitely recommend using a combination approach. The 30% rule is a good starting point, but tracking your actual expenses can really help you optimize that percentage over time. For mileage tracking, I've found that consistency is key - whatever app you choose, make sure you actually use it religiously. I started with a simple spreadsheet but quickly realized I was forgetting to log trips. Now I use an automated app and it's saved me thousands in deductions. One thing I wish someone had told me when I started: keep ALL your receipts, even for small expenses. Coffee with a potential client, parking meters when visiting client sites, even a portion of your internet bill if you work from home. These little things add up significantly over the year. Also, consider setting up a separate business checking account if you haven't already. It makes tracking business expenses so much easier come tax time, and it looks more professional when dealing with clients.