[steve10]

Thanks for this great board. Here is my question:
In 2006, I happened to have income in both w-2 and 1099 misc. Assume that my w-2 income is $50000 and my 1099 misc income is $10000. We know that I am allowed to deduct quite broad expense on 1099 (by filling schedule C), like traveling, vehicle, home office, etc. My question is, am I allowed to deduct more than $10000, which is shown on my 1099 misc, like $20000, or even $30000? Thanks.

[redberryl]

You should be able to deduct losses (keep your receipts) even if they are over your income from the 1099MISC. You should refer to the following link from the IRS to see if you have to depreciate any of your expenses http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

[steve10]

Thanks, redberryl, that helps. This is my first year to get 1099misc, and I am completely unprepared. I mean, I didn't keep receipts and records for anything. All I do is to rebuild the expense list from my credit. I am losing quite a percentage of expense, which was based on cash.

[AtlantaTaxExpert]

Steve:

If you claim expenses in excess of your income, you are more likely to get audited by the IRS, especially if you do it in multiple, consecutive years. Hence, you WILL need he receipts for expendituresother than vehcile-related expenses.

The vehicle expenses can be accounted for using the mileage rates.