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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55477
Experience:  29 years of experience as a tax, real estate, and business attorney.
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I have a sole proprietorship consulting business that netted

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I have a sole proprietorship consulting business that netted less than $4,000 in 2012. For one job I hired two outside people to help me. One made less than $600 so I did not give them a 1099. The other one did and I sent the 1099 for $1025.00. She will pay the taxes on this but can I subtract that amount that was sent to me on my 1099 for the company that hired me to do the work? If I have to claim the whole amount that would mean that both me and the subcontractor would be paying tax on the $1025. Can I subtract that amount from my misc. income when I file?
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. Yes, you report the full amount of the 1099 you received on Schedule C. Then in Part II on that same Schedule C, you enter the contractors you paid...both the one for under $600 and the one for the $1025. Thus, these will all net out and you will only include in your taxable income on your Form 1040 the net amount.

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Customer: replied 4 years ago.

I read that I did not need to send a 1099 to anyone I subcontracted that was paid less than $600. So I can still deduct that $600 from the original amount and not pay tax on it? Does that mean I enter only the name of the person who I paid the $600 to even though they did not receive a 1099 from me because I was not required to send one?

Thanks for following up. You are correct in that you did not need to send the 1099 for the amount under $600. But, it is still an allowable expense and you can deduct it against your revenues.
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