I report the income he pays me on a schedule C. Shouldn't he take a deduction from his gross income?
Yes, either as payroll expenses, if he issues you a W-2, or Contract Labor, if you are not an employee.
Per Publication 334, Tax Guide for Small Business - IRS.gov:
Employees' Pay
You can generally deduct on Schedule C the pay you give
your employees for the services they perform for your
business. The pay may be in cash, property, or services.
To be deductible, your employees' pay must be an ordinary
and necessary expense and you must pay or incur it
in the tax year. In addition, the pay must meet both the following
tests.
The pay must be reasonable.
The pay must be for services performed.
Chapter 2 in Pub. 535 explains and defines these requirements.
You cannot deduct your own salary or any personal
withdrawals you make from your business. As a sole proprietor,
you are not an employee of the business.
Yes, either as payroll expenses, if he issues you a W-2, or Contract Labor, if you are not an employee.
Per Publication 334, Tax Guide for Small Business - IRS.gov:
Employees' Pay
You can generally deduct on Schedule C the pay you give
your employees for the services they perform for your
business. The pay may be in cash, property, or services.
To be deductible, your employees' pay must be an ordinary
and necessary expense and you must pay or incur it
in the tax year. In addition, the pay must meet both the following
tests.
The pay must be reasonable.
The pay must be for services performed.
Chapter 2 in Pub. 535 explains and defines these requirements.
You cannot deduct your own salary or any personal
withdrawals you make from your business. As a sole proprietor,
you are not an employee of the business.