Can I deduct from my taxes the workers compensation deductions I am forced to pay as an IC for the company I work for.

Forum|Forum|7 years ago
May 31, 2019
12 replies
85 views

The amount of the Workers Compensation is never listed on the 1099 I receive from the company I work for, so the only proof I have that it was paid was my last pay stub.

TurboTax Basic Windows

Best answer by

If you are an Independent Contractor and file a Schedule C then yes, you may deduct the cost of your Workers Compensation expense. You cannot however "double-dip".

If the amount that this particular company reports on your 1099-MISC is your contract amount in full {say $1000} then you can deduct your Workers Comp (WC) insurance {say $100} on your Schedule C as an expense.

If what was actually reported on the 1099-MISC was only $900 (in our example) and that's the amount you reported on your Schedule C then you couldn't also deduct the WC because you had never claimed that amount having been included as income.

The key is... if actual cash received (in our example) was $900 then you can claim $1000 in income and $100 in WC expense (Taxable $900). However, you cannot claim $900 in income and also deduct the $100 WC expense (Taxable only $800).

[updated 1/19/16 @ 1317PST]

How to get started entering the information for your Schedule C business

In your TurboTax Home & Business edition:

Click the Business tab, and Continue.
On the How do you want to enter your business income? screen:
Go through all areas sequentially by clicking Walk me through everything. under Guide me, or I'll choose what I work on under I'll explore on my own.
Choose your topics by clicking Start/Update and follow the prompts.

You can also use the TurboTax search box by entering Schedule C and clicking on the Jump to Schedule C link.

S

SweetieJean

Alumni - Champ

Is it a policy you bought yourself, or through the company for whom you are working?
<a rel="nofollow" target="_blank" href="http://injury.findlaw.com/workers-compensation/workers-compensation-for-the-self-employed.html">http://injury.findlaw.com/workers-compensation/workers-compensation-for-the-self-employed.html</a>
and you do not get a "pay stub" if you get a 1099-MISC
Also see this:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee">https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee</a>

J

jerseyshore21Author

Level 2

The company I am working for as an IC is taking the deductions out of my pay. I did not buy on my own. I work for other companies in the same capacity and they do not take WC out.

Lisa995

Alumni - Champ

Is the amount on the 1099 they give you for the gross amount of compensation or the net (after they take out the WC)?

♪♫•*¨*•.¸¸♥Lisa♥ ¸¸.•*¨*•♫♪

macuser_22

Alumni - Champ

Mandatory workers compensation insurance is normally withheld for employees, not independent contractors, but the law is a state law and is different in every state. In most states mandatory workers computation is a deductible state tax but that depends on state law.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

J

jerseyshore21Author

Level 2

net after they take out the WC

J

jerseyshore21Author

Level 2

sorry its gross not net

A

Anonymous

Answer

If you are an Independent Contractor and file a Schedule C then yes, you may deduct the cost of your Workers Compensation expense. You cannot however "double-dip".

If the amount that this particular company reports on your 1099-MISC is your contract amount in full {say $1000} then you can deduct your Workers Comp (WC) insurance {say $100} on your Schedule C as an expense.

If what was actually reported on the 1099-MISC was only $900 (in our example) and that's the amount you reported on your Schedule C then you couldn't also deduct the WC because you had never claimed that amount having been included as income.

The key is... if actual cash received (in our example) was $900 then you can claim $1000 in income and $100 in WC expense (Taxable $900). However, you cannot claim $900 in income and also deduct the $100 WC expense (Taxable only $800).

[updated 1/19/16 @ 1317PST]

How to get started entering the information for your Schedule C business

In your TurboTax Home & Business edition:

Click the Business tab, and Continue.
On the How do you want to enter your business income? screen:
Go through all areas sequentially by clicking Walk me through everything. under Guide me, or I'll choose what I work on under I'll explore on my own.
Choose your topics by clicking Start/Update and follow the prompts.

You can also use the TurboTax search box by entering Schedule C and clicking on the Jump to Schedule C link.