🧩 What Should Not Be Missed

In this final post, we highlight key points to help you stay on top of state-level requirements and potential deductions.

📍 State-level reporting

The key factor is where you physically performed the work. If you worked in multiple states (for example, New York and New Jersey), you may need to allocate income between those states, file tax returns, and pay taxes in each of them.

💡 Tip: keep records of when and where you performed services, and consider these rules when deciding where to work.

⚙️ Expenses and deductions

As a reminder, self-employment income can be reduced by ordinary, necessary, and well-documented business expenses. In addition, certain special rules may apply:

• Tips — the OBBBA law for 2025–2028 introduced the possibility of a tip deduction (up to $25,000 per year, subject to conditions such as profession and income level). Tips must still be reported, and the deduction is claimed using Schedule 1-A.

• QBI deduction — in certain cases, taxpayers may deduct up to 20% of qualified business income from taxable income. For self-employed individuals, the income must: 1) be earned in the U.S., and 2) not be received as an employee or as a C corporation owner. Additional limitations may apply at higher income levels.

❗️Bottom line

Self-employment income is a distinct category that must be reported and calculated separately from other types of income. It is important to consider the specifics of tax calculation, available deductions, and state-level requirements.

We’ll be glad to review your situation and assist with accurate reporting of any income and U.S. tax filings — your US Tax Team.

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