Impact of 1099 sub-contracting on sole proprietorship taxes.

[rachel0912098]

I'm a sole proprietor and have a big contract with a company. I want to pull in a fellow contractor (let's call them R) onto this project, and I have the option to either contract (1099) to them myself, or have them sign their own contract with the large company. I'd rather contract to them myself but I was wondering if this leads to more taxes. Would I be able to write off all payments to R as business expenses? and would my personal taxes still go up, since my sole proprietorship GROSS income went up?

[dev145]

Yes, you will be able to write of any payment you make to R as business expense. Make sure to have him/her fill out form W9 and issue a 1099-NEC if payment is more than $600. See below links.

https://www.irs.gov/forms-pubs/about-form-w-9

https://www.irs.gov/forms-pubs/about-form-1099-nec

Your gross income will go up but your personal taxes are calculated on net income.