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TurboTax does deduct the full $399 but when you enter an expense, it does not reduce your tax amount (liability) dollar for dollar.
That does not make sense.
I just entered a clients 1099 for $4200 Total for Labor and mateial cost
Taxes Due went to $4087.00
I then added the cost of material expenses to TurboTax under Expenses>Supplies for $1850.00
TurboTax recalculated to $3685.00 owed
It took $402.00off the amount owed instead of $1850.
Why am I paying income tax on $1850 of job material costs?
@firstaidpc wrote:It took $402.00off the amount owed instead of $1850.
Why am I paying income tax on $1850 of job material costs?
The TAX on $1850 is $402. That is why when you added the $1850 as a deduction, it saved you $402.
You don't really expect your taxes to be decreased by $1850 for $1850 of expenses, do you? The government isn't paying 100% for your expenses. You just don't pay TAX on that amount.
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