If you are an independent contractor delivering newspapers as a business activity, you can generally deduct your legitimate expenses incurred as business expenses. This is better than deducting them as miscellaneous itemized deductions on a personal return, because you can only deduct miscellaneous expenses on your personal return to the extent they exceed 2 percent of your income. This means that 2 percent of your business expenses will wind up coming out of your own pocket. But if you treat the newspaper delivery route like a business, you can deduct all your expenses.
Gather all records. You will need any IRS Form 1099 MISCs you may have received from the newspaper or distributor for your services. You will also need to consolidate the receipts or records of all your business expenses. In addition, you will need your mileage records for the car you use to deliver papers.
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Download and fill out a Schedule C, Profit or Loss from Business. You can do so using the link in resources. This is the form the IRS uses to document everything coming in or out of a closely-held small business, such as a newspaper delivery route. You will not need to pay income taxes on every dollar that came in your business last year -- only on profits, after your expenses are taken into account. You can take a deduction for rubber bands, plastic bags, mileage on your vehicle, money paid to hire people to help you, and any other reasonable and necessary business expense.
Download and fill out an IRS Form 1040. This is your individual tax return. You cannot file Form 1040EZ if you are claiming a profit or loss from your business on Schedule C.
You can deduct 50 cents per mile on your Schedule C for miles driven in connection with your newspaper delivery business for Tax Year 2010.
If you are self-employed, you must also fill out a Form 1040SE, to document your earnings and calculate your tax liability for Social Security and Medicare income.