Can I Write This Off?

Can I write off freelancer subcontractors?

TL;DR

Yes, you can write off payments to freelancer subcontractors as a business expense.

Detailed Answer

Payments made to subcontractors for services directly related to your business are deductible as business expenses. This is applicable if the subcontractors are not employees and you have issued them a Form 1099-NEC if payments exceed $600 in a year. Ensure that the subcontractor relationship is properly documented and that the expenses are ordinary and necessary for your business operations.

Where to Put It on the Tax Form

Report this deduction on Schedule C (Form 1040), Line 11: 'Contract labor'.

Real World Example

A freelance graphic designer hires another designer to help complete a large project. The payments made to this subcontractor are deductible as they are necessary to fulfill the contract with the client.

Calculation Required

A calculation is required for this deduction.

Add up all payments made to subcontractors during the tax year. Ensure that these payments are properly documented and reported on Form 1099-NEC if applicable.

Audit Risk & Documentation Tips

To minimize audit risk, keep detailed records of all payments, including invoices and contracts with subcontractors. Ensure that you issue Form 1099-NEC to subcontractors if payments exceed $600. Maintain documentation that supports the business necessity of hiring subcontractors.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

FreelancersSmall BusinessConsultantsContractors

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 7, 2025

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