I needed someone to work an event with me, to help speed things up, as my client asked for a second person.
I asked a friend also working the event if she knew of anyone and she referred someone to me, also giving her the wrong pay amount. I end up making $4 after the credit card fees when being paid by the client.
The subcontractor is being paid less than $600. How do I write off this expense, and will it be fully deducted, or only a percent, causing me to lose money on this "venture"?
Yes you can expense it.
Go to Business tab- then Continue
Business Income and Expenses - Click the Start or Update button
If you haven't added a business yet you have to go though a lot of screens describing your business. Or if you already added your business, you should see the Business Summary page that lists your businesses, (right below the list you can Add Another Business)
Then click EDIT by the business name and the next screen should be a list of topics,
Business Profile, Income, Inventory/Cost of Goods Sold, Expenses, Assets, and Final Details last.
Under Business Expenses, Click Start or Update by Other common business expenses
Contract Labor is the 5th item in list.
Would that deduct the full amount that they were paid, or a portion of it, as other expenses do?
Huh? What expenses only deduct a portion? Most expenses are 100% deductible. You are filling out schedule C right?
By the way, when you enter expenses it will reduce your Profit or increase your loss. So you will have lost money on this if your expenses are more than the income. You can deduct a business loss on your return.
Whenever I have entered an expense, for example, $100 in advertising, the numbers TurboTax calculates never adjust by $100, it's usually significantly less.
You mean the refund or tax due? Right, the tax on your income is a percentage. Like if you are in the 25% tax bracket a $100 deduction will only reduce the tax by 25% ($25). And only reduce the self employment tax by 15.3%.
Gotcha, I've been reading it wrong all along then. My bad.