I’m 1099 and I would like to optimize my tax

What to do in my case?

# My 1099

1. Understand What You’re Paying

As a 1099 contractor, you pay:

•	Federal income tax

•	State income tax (depending on your state)

•	Self-employment tax (15.3%)

•	12.4% Social Security

•	2.9% Medicare

That 15.3% is why tax planning is critical.

2. Deduct Everything Legitimate (Biggest Impact)

You only pay tax on net profit (Income – Expenses).

Common deductions for someone like you (developer + investor):

Business Expenses

•	Computer, iMac, MacBook

•	Software subscriptions (hosting, APIs, tools)

•	Domain names & hosting

•	Internet (business portion)

•	Phone (business portion)

•	Cloud services

•	SaaS tools

Home Office Deduction

If you use a dedicated workspace: • Portion of rent/mortgage

•	Utilities

•	Insurance

•	Property tax

This can be powerful.

Mileage

If you drive for business:

• 2025 IRS rate ~ ~$0.67 per mile (subject to change yearly)

Track it.

3. Retirement = Huge Tax Reduction

This is where 1099 workers win.

SEP IRA

•	Contribute up to 25% of net earnings

•	Max cap (over $60k, adjusted yearly)

•	Reduces taxable income

Solo 401(k) (Even Better)

•	Employee contribution (like a W2)

•	PLUS employer contribution

•	Can shelter $60k+ depending on income

If you’re serious about wealth building, this is your #1 tax weapon.

##4. Deduct Health Insurance

If you pay your own health insurance, you can deduct: • Premiums for you

•	Spouse

•	Dependents

This comes off the top of your income.

5. Consider S-Corp Election (Advanced Strategy)

If you make $70k–$100k+ net profit, talk to a CPA about electing S-Corp status.

Why?

Instead of paying 15.3% self-employment tax on all profit: • You pay yourself a “reasonable salary”

•	Remaining profit is distribution (not subject to SE tax)

This can save:

•	$5,000–$20,000+ per year depending on income

But: • Payroll required

•	More compliance

•	Extra accounting costs

Worth it if income is high enough.

6. 20% QBI Deduction (Very Important)

As a 1099 contractor, you may qualify for:

Qualified Business Income (QBI) deduction

You can deduct up to 20% of your business profit

Example:

• If you net $100,000

• You might only pay income tax on $80,000

This is huge.

7. Pay Quarterly Estimated Taxes

To avoid penalties: • April

•	June

•	September

•	January

Set aside 25%–35% of profit into a separate tax savings account.

8. Use a Tax Strategy Flow (Simple Version)

Here’s the order I’d structure it: 1. Deduct all business expenses

2.	Deduct health insurance

3.	Max Solo 401k or SEP IRA

4.	Take QBI deduction

5.	Evaluate S-Corp if profit is high

If You Want It Customized

To optimize specifically for you, I need: • How much you make gross per year?

•	Approximate expenses?

•	Are you married?

•	Do you have kids?

•	What state do you live in?

•	Do you already contribute to retirement?