Quick tip from someone who's been an independent contractor for 7+ years: GET QUICKBOOKS SELF-EMPLOYED! It links to your bank accounts and credit cards, automatically categorizes expenses, tracks mileage with GPS, and separates business from personal stuff. Makes tax time so much easier! The mileage tracker alone saved me almost $3k in deductions last year because i literally just open the app when i start driving to a job site and it does everything automatically.

As someone who's been doing contract work for about 3 years now, I can definitely relate to the overwhelming feeling of trying to figure out all the deductions! A few things that really helped me: 1. **Set up a simple system NOW** - I wish I had started tracking everything from day one instead of trying to reconstruct expenses later. Even a basic spreadsheet with columns for date, amount, category, and description works wonders. 2. **Don't forget about business use of your home** - Even if you're on the road most of the time, if you do any administrative work from home (scheduling, invoicing, etc.), you might qualify for the simplified home office deduction. It's $5 per square foot up to 300 sq ft. 3. **Consider forming an LLC** - This won't help with this year's taxes, but for next year it can provide liability protection and potentially some additional tax benefits depending on your situation. 4. **Save for taxes religiously** - I learned this the hard way my first year. Set aside 25-30% of every payment you receive. Open a separate savings account just for taxes so you're not tempted to spend it. The learning curve is steep but once you get a system down, it becomes much more manageable. You're already ahead of the game by thinking about this stuff early in the year instead of scrambling at tax time!

Logan, you're absolutely right and your brother is wrong. As someone who's been self-employed for over 8 years, I can confirm that health insurance premiums do NOT reduce your self-employment tax liability. You'll pay the full 15.3% SE tax on your entire net profit from Schedule C, then get to deduct the health insurance premiums later on Form 1040 Schedule 1. This is one of the most common misconceptions about self-employment taxes. The health insurance deduction is what's called an "above-the-line" deduction that reduces your adjusted gross income for regular income tax purposes, but it happens after SE tax is calculated. So in your case with $750/month ($9,000/year) in premiums, you'll still pay SE tax on your full 1099 income, but you'll save on income tax by deducting those premiums. It's frustrating because it feels like it should be a business expense, but the IRS treats it as a personal deduction with special rules for self-employed folks. Show your brother IRS Publication 535 - it clearly states that health insurance premiums are not deductible as business expenses on Schedule C. You can find it on the IRS website. Good luck settling that family argument!

I'm dealing with this exact situation right now as a new freelancer! This thread has been incredibly helpful in clearing up the confusion. I was about to make the same mistake your brother suggested and deduct my health insurance premiums from my Schedule C profit before calculating SE tax. It's really counterintuitive that something so essential for running a business (staying healthy so you can work) isn't treated as a business expense. I'm paying about $650/month for my plan, so that's almost $8,000 a year that I'll be paying the full 15.3% SE tax on even though it's going straight to health insurance. One thing I'm curious about - does anyone know if there are any proposed changes to this rule? It seems like such an unfair burden on self-employed people compared to traditional employees who get pre-tax health benefits. We're already paying double the Social Security and Medicare taxes, and then we can't even get health insurance to reduce that base. Thanks to everyone who shared their experiences and the resources like the IRS publications. This is definitely one of those tax rules that catches a lot of new freelancers off guard!

Honestly the most straightforward way to handle this is to file your own taxes separately from your dad. You can tell him you want to learn financial independence without sharing the details. Use something like FreeTaxUSA which handles self-employment pretty well and is actually free (unlike some "free" services that charge for Schedule C). Just make sure to set aside about 25-30% of what you make for taxes since you'll owe both income tax and self-employment tax (15.3%) on your profits. First-time side hustlers often get shocked by that self-employment tax.

Just wanted to add that you should also consider what happens if your income grows beyond what you initially expect. I started selling handmade jewelry thinking I'd make maybe $1,000 a year, but ended up making $8,000 because demand was higher than expected. When you cross certain income thresholds, you might need to make quarterly estimated tax payments to avoid penalties. The IRS expects you to pay taxes as you earn, not just once a year. If you owe more than $1,000 in taxes when you file, they can hit you with underpayment penalties. Also, keep really good records from day one - screenshots of all payments, receipts for any business expenses, mileage if you drive anywhere for the business, etc. It's so much easier to track this stuff as you go rather than trying to reconstruct everything at tax time. A simple spreadsheet or even a notes app on your phone works fine when you're starting small.

Something important that hasn't been mentioned yet: if you use your home partly for business (home office deduction) and you sell the home at a profit, the portion of the profit attributable to the business use is NOT eligible for the capital gains exclusion ($250k for single, $500k for married). For example, if you've been claiming 20% business use of your home, then 20% of your profit when selling would be taxable as a capital gain, even if you otherwise qualify for the exclusion. When my wife and I sold our previous home with a $220k profit after claiming home office deductions, we had to pay capital gains tax on about $30k of that profit due to the business use portion. Still worked out better than not claiming the home office deduction over the years, but something to be aware of in your long-term planning.

This is exactly the kind of thorough analysis I was hoping to find! As someone who's been considering this same move, all these responses have been incredibly helpful in understanding the full picture. Between the higher mortgage rates for LLC purchases (great point about the 0.75% difference), the potential loss of capital gains exclusions, and the complications with personal use being treated as taxable benefits, it's becoming clear that the "tax advantages" I'd heard about are largely mythical for a primary residence situation. I'm particularly interested in what @Romeo Barrett mentioned about the capital gains implications of the home office deduction - that's something I need to factor into my long-term planning. Even though it sounds like the home office deduction is still worthwhile over time, knowing about that partial capital gains exposure when selling is crucial for making informed decisions. It seems like the consensus is pretty clear: keep the primary residence in personal name, take the home office deduction if applicable, and make sure you have good insurance coverage. The simplicity and actual tax benefits of this approach outweigh the theoretical advantages of LLC ownership for most situations like mine. Thanks everyone for sharing your experiences - this has saved me from what could have been a costly mistake!

Has anyone considered the step-up in basis implications here? If the house appreciates and you both own it, when one spouse dies, the surviving spouse might only get a step-up in basis on half the property value. Whereas if only one spouse owns it, the entire property could get a step-up when that spouse dies. Just something to think about for long-term planning.

You're absolutely right about the step-up in basis considerations, and @Victoria Scott brings up an excellent point about non-citizen spouses and estate tax rules. For estate tax purposes, the unlimited marital deduction that applies to citizen spouses does NOT apply to non-citizen spouses, even if they're permanent residents. Instead, there's a much lower annual exclusion (around $185,000 for 2024). This means that when a US citizen dies, transfers to a non-citizen spouse above this threshold could be subject to estate tax. However, there's a planning tool called a Qualified Domestic Trust (QDOT) that can help defer estate taxes for non-citizen spouses. The surviving non-citizen spouse can receive income from the trust, and estate taxes are deferred until distributions of principal or until the surviving spouse becomes a US citizen. So while adding your wife to the deed now creates the gift tax filing requirement we've discussed, it might actually be beneficial from an estate planning perspective since it gets half the property out of your taxable estate. But this is definitely getting into complex territory where you'd want to consult with an estate planning attorney who understands the international implications. The basis step-up issue is real though - with joint ownership, only half the property gets a stepped-up basis when the first spouse dies, versus the full step-up if only one spouse owned it.