Independent Contractors

Forum|Forum|4 years ago
March 7, 2022
1 reply
19 views

In the section "Enter independent contractor payments" does that include both 1099 payments and those that did not meet the $600 threshold? Also, will I not also be deducting it as a repair expense and in some cases depreciating the replacement? For example, a $10k roof replacement; it is a $10k 1099 to my roofer and an item that gets depreciated. Also, a $500 payment for yard services, it is a maintenance expense but not a 1099. But both independent contractors.

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Best answer by LenaH

Your expense for independent contractors can include both those that you sent a 1099 to and those that did not meet the $600 threshold. However, you may also send a 1099 for independent contractors that are deducted elsewhere on your return. You cannot deduct the same expense twice on your return.

Typically, you depreciate larger purchases (usually more than $200), which last more than one year. If you had paid money for a capital expenditure or purchased an asset, you would classify it as an asset on your Balance Sheet and deduct it through depreciation over the life of the asset on your Profit & Loss Statement. You cannot classify the same transaction as an asset and also deduct it as an expense, even if you did send them a 1099.

Your yard services would be deducted as repair and maintenance expense, but not also in the independent contractor category.

LenaH

Answer

Employee Tax Expert

Your expense for independent contractors can include both those that you sent a 1099 to and those that did not meet the $600 threshold. However, you may also send a 1099 for independent contractors that are deducted elsewhere on your return. You cannot deduct the same expense twice on your return.

Typically, you depreciate larger purchases (usually more than $200), which last more than one year. If you had paid money for a capital expenditure or purchased an asset, you would classify it as an asset on your Balance Sheet and deduct it through depreciation over the life of the asset on your Profit & Loss Statement. You cannot classify the same transaction as an asset and also deduct it as an expense, even if you did send them a 1099.

Your yard services would be deducted as repair and maintenance expense, but not also in the independent contractor category.

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V

VSM5Author

Level 2

Thank you, that is a nice and detailed answer. That is what prompted my question as it seemed that turbotax was double dipping by the results I was getting. Also, I was thinking that turbotax was trying to match the total that I sent to all independent contractors (form 1096) in asking this question. So based on your reply, for my case for this question the value for this turbo tax question could be zero, even though I paid over $30k to contractors this last year. In my case, I am working on a 1065 for a partnership real estate LLC and most all services are going to be a maintenance/repair deduction or capital improvement to be depreciated. I can't think of any other contractor that I paid this last year that would not be deducted or depreciated. Your insight is greatly appreciated.