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extonms
New Member

Do I put the total wages of employees as an expenses or under "Cost of Labor" under "Cost of Goods Sold"?

 
4 Replies
DoninGA
Level 15

Do I put the total wages of employees as an expenses or under "Cost of Labor" under "Cost of Goods Sold"?

Cost of Labor

extonms
New Member

Do I put the total wages of employees as an expenses or under "Cost of Labor" under "Cost of Goods Sold"?

Thanks!

Carl
Level 15

Do I put the total wages of employees as an expenses or under "Cost of Labor" under "Cost of Goods Sold"?

If it's wages for W-2 employees,it should already be included in the section for reporting employee wages. So you would not enter it a 2nd time anywhere else on the return as that would be double dipping.

If wages for subcontractors to whom you did "NOT" issue a 1099-MISC, then you can include it as cost of labor in the COGS section.

If you issued a 1099-MISC, then you were already asked earlier in the program for 1099-MISC wages paid and you entered an amount, , then you do not include that amount a 2nd time anywhere else on the return.

 

tagteam
Level 15

Do I put the total wages of employees as an expenses or under "Cost of Labor" under "Cost of Goods Sold"?


@Carl wrote:

If wages for subcontractors to whom you did "NOT" issue a 1099-MISC, then you can include it as cost of labor in the COGS section.


Wages are payments made to an employee by an employer; not to subcontractors. 

 

Regardless, if payments made to subcontractors are $600 or more then, with limited exceptions, a 1099-MISC is required to be filed.

 

Further, if the labor costs are tied directly to the production of goods, they can be factored into the cost of goods sold equation.

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