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If another business finds clients for my tutoring business, earns a fee for each tutoring session, pays me, and issues me a 1099, can I claim their fee as a commission?

I'm a sole proprietor of a tutoring business. I use an online platform that contains specialized lessons and practice games for dyslexic children, and keeps records of my notes and the students' progress. The platform is created and managed by a company I'll call "Dyslexia Inc." Another tutor who uses Dyslexia, Inc, who I'll call "Mary," does outreach and marketing to find students for Dyslexia, Inc, and she assigns some of the students to me. Each time a student pays for my tutoring services, they pay Dyslexia, Inc, who then takes out a platform fee, and pays Mary a comission for finding the student. This commission continues forever, every time a student pays for my tutoring services. Mary's business issues monthly paychecks and a 1099 for me. Can I claim the fees and commission that Dyslexia, Inc, and Mary earn as a business expense? Or is it more like Mary is my client, she pays me a fee for services I render, and the rest is none of my business (no pun intended)?
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3 Replies
ColeenD3
Expert Alumni

If another business finds clients for my tutoring business, earns a fee for each tutoring session, pays me, and issues me a 1099, can I claim their fee as a commission?

No, she is taking her fee before she issues you your portion. It is not part of your income.

If another business finds clients for my tutoring business, earns a fee for each tutoring session, pays me, and issues me a 1099, can I claim their fee as a commission?

Thanks! For it to be a commission, would the cash have to move in the other direction, from the client to me to Mary, in payment for for one thing only--finding me clients?

LeonardS
Expert Alumni

If another business finds clients for my tutoring business, earns a fee for each tutoring session, pays me, and issues me a 1099, can I claim their fee as a commission?

Yes, what you described would be an example of a commission payment.  You receive the full amount from the client and then pay Mary a commission for finding the client.

@tinyoffice

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