Taxpayer asks:

I do side work occasionally during the year. It is in the construction industry. I pay people to help me do this work and it is usually under $600.00. I am the one who gets 1099’d and would like to know if I can deduct what I pay these people. I have cancelled checks to prove that I have paid these people. Any help would be appreciated.

Taxgirl says:

You can absolutely deduct what you pay your subcontractors! There is no requirement that you issue a 1099 in order to deduct expenses for workers.

Hopefully, you’ve kept good records to substantiate your payments. You can deduct those payments as expenses on your Schedule C, where you would also report your income as reported the forms 1099 that you’ve received (as well as other income not that you might have received and was not reported on a 1099).

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Kelly Erb is a tax attorney, tax writer and podcaster.

Comments

  1. If you do not issue 1099’s you run the risk of having payments reclassified as wages

  2. Hi KELLY, MY NAME IS JAMES AND I NEED YOUR HELP. OVER THE LAST FEW YEARS I HAVE BEEN A SUBCONTRACTOR FOR CABLE AND SATELLITE COMPANIES. I FILE WITH MY ACCOUNTANT EVERY YEAR. THIS YEAR I WANT TO SAVE MONEY AND FILE MYSELF. WHERE CAN I FIND A COMPLETE LIST OF DEDUCTIBLES.I NEED TO KNOW WHAT WOULD GET ME MORE MONEY. AN EXAMPLE WOULD BE, DO I FILE GAS OR MILES. ANYWAY THANK YOU FOR YOUR TIME AND I HOPE YOU CAN HELP.

  3. CHARLES MONROE Reply

    I STARTED A PAINTING COMPANY AND I AM A SUBCONTRACTOR,I HAVE TWO GUYS WHO WORK WITH ME ON HOUSE TO HOUSE EVERY WEEK,I PAY THEM BY CHECK CAN I JUST 1099 THEM AT THE END OF THE YEAR

    THANK YOU

    • It’s hard to say without knowing more but the “every week” bit makes it sound like they are employees more than independent contractors. If that’s the case, they would get a W-2.

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