Schedule C

• A schedule C tax form provides an itemized list of the allowable deductions a business can take. These range from advertising costs to mileage for business vehicles. The form has separate sections with each type of deduction and a box to fill in with the total annual amount you are claiming. The total of all the deductions on the Schedule "C" is subtracted from the total profit from the business to determine the actual income the business made, or more commonly called, the net earnings.
  
  

Expenses

• All business expenses related to the operation of the business are deductible, although some are not a 100-percent deduction. Entertainment costs, such as taking a client to lunch, contain a 50-percent limit on the deduction. Other deductions have several options for the taking the deductions, such as a company vehicle, which you can depreciate over several years, take as a one-time 179 deduction, write off the total annual payments or take the mileage at the approved IRS rate.
  
  

179 Deductions

• A 179 deduction provides the ability to write off the total cost of equipment and items purchased for the business. There is a cap on the amount you can deduct that varies per year. Items that qualify for a 179 deduction must meet two requirements: the item must be bought before the end of the tax year, and it must be placed in service before the end of the tax year. Tractors, computers, software, cameras and office furniture all fall under allowable 1099 deductions you can take.
  
  

Self-Employment Tax

• Receiving a 1099 form requires you to pay self-employment tax, which is normally paid by an employer. Self-employment tax combines two different taxes: social security and Medicare. The social-security tax is substantially a higher percentage than the Medicare tax. Calculate both taxes as a percentage of your total wages, tips and net earnings. The percentage amount to deduct can vary per tax year. Review the current IRS code or website for the current percentage amount.