Day 13: What to Know About 1099-NEC & Contractors: A Simple Guide for Businesses and Freelancers

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🧾 Day 13: What to Know About 1099-NEC & Contractors: A Simple Guide for Businesses and Freelancers In today’s flexible work landscape, hiring independent contractors can be a smart move—offering agility without the long-term commitments of traditional employment. But with this freedom comes responsibility, especially when it’s time to tackle tax forms like the 1099-NEC . Let’s break down what you need to know about using this form and working with contractors, without the tax jargon overload. πŸ“Œ What Is the 1099-NEC? The 1099-NEC (Nonemployee Compensation) is an IRS form used to report payments made to nonemployees for services. It replaced the old use of Form 1099-MISC for service payments starting in 2020 . You’ll need to issue this form if you paid: $600 or more in the calendar year To an individual or business not classified as an employee For services (not products or rent) Who is not incorporated—i.e., a sole proprietor or LLC taxed as such It goes to both t...
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6 Tax-Saving Tips You Might Be Missing

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πŸ’°6 Tax-Saving Tips You Might Be Missing (Excluding 401(k) & IRA!)

When tax season rolls around, everyone’s looking for ways to save a bit more. While most people are familiar with saving through 401(k) or IRA contributions, there are plenty of other tax-saving strategies worth exploring.

Here are 6 practical tax-saving tips that don’t involve a 401(k) or IRA—perfect for employees, freelancers, or anyone looking to lower their tax bill smartly.

1. πŸ’Ό Use a Flexible Spending Account (FSA)

An FSA lets you set aside pre-tax income for medical or dependent care expenses.

  • Healthcare FSA: Covers out-of-pocket medical costs like copays, prescriptions, or medical devices.

  • Dependent Care FSA: Helps with childcare expenses, including daycare or after-school care.

Why it matters: The amount you contribute reduces your taxable income, which can lower your total tax liability.

2. 🧾 Deduct Business Expenses (Freelancers & Side Hustlers)

If you freelance, run a business, or have a side gig, you may be eligible to deduct business-related expenses:

  • Software, tools, or equipment used for work

  • A portion of your home if you use it as an office (home office deduction)

  • Business mileage or vehicle use

Tip: Keep detailed records. A simple spreadsheet or expense tracker app works wonders.

3. πŸŽ“ Claim Education Tax Credits

Continuing your education? The government rewards lifelong learners:

  • Lifetime Learning Credit: Covers college courses, certifications, and even some job training.

  • Student Loan Interest Deduction: Lets you deduct up to $2,500 in student loan interest per year.

4. πŸ’ Deduct Charitable Donations

Donations to qualified charities are tax-deductible, including:

  • Cash donations

  • Donated goods like clothes, furniture, or books

Important: Always get a receipt, and ensure the organization is a registered 501(c)(3) nonprofit.

5. 🏠 Take Advantage of Homeowner Deductions

If you own a home, don't forget these potential deductions:

  • Mortgage interest

  • Property taxes

  • Energy-efficient upgrades (like solar panels) can qualify for residential energy tax credits

6. 🍼 Claim Tax Credits for Families or Low Income

If you have children or a moderate-to-low income, you may qualify for:

  • Child Tax Credit: Up to $2,000 per child

  • Earned Income Tax Credit (EITC): A refundable credit that can provide significant savings or even a refund

✅ Final Thoughts: “Small Savings, Big Impact”

Taxes don’t have to be painful. By taking advantage of less obvious deductions and credits, you can keep more of your hard-earned money—without relying on just retirement accounts.

Start applying these tips today and approach tax season with confidence.

Want more tax hacks tailored to your situation? Drop a comment or send a message—happy to help!

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