Question 1

What's the difference between W-2 and 1099 taxes for developers?

Accepted Answer

As a W-2 employee, your employer pays half of Social Security and Medicare taxes. As a 1099 contractor, you pay the full 15.3% self-employment tax yourself. However, 1099 developers can deduct business expenses (home office, equipment, software) that W-2 employees cannot.

Question 2

Can freelance developers deduct a home office?

Accepted Answer

Yes, if you use a dedicated space in your home exclusively and regularly for business. You can use the simplified method ($5/sq ft, up to 300 sq ft = $1,500 max) or the regular method (calculate actual expenses based on the percentage of home used). The space must be your principal place of business.

Question 3

Should freelance developers set up an S-Corp?

Accepted Answer

If you earn over $80,000-$100,000 as a freelance developer, an S-Corp election may save on self-employment tax. You'd pay yourself a reasonable salary (subject to payroll tax) and take remaining profits as distributions (no SE tax). Consult a tax professional to see if the savings outweigh the additional costs.

Question 4

Are SaaS and cloud service subscriptions tax-deductible?

Accepted Answer

Yes. AWS, Google Cloud, GitHub, JetBrains, and other software subscriptions used for business are fully deductible. If a subscription is used for both personal and business purposes, you can deduct the business-use percentage.

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