No. Your tax bill would be the same whether or not your expenses were included on Form 1099-NEC because you pay tax on net profit.
If you made $120,000 and deducted $60,000 your taxable net profit would be $60,000. If your Form 1099-NEC showed only $60,000 of earnings and no expenses, you would still be taxed on $60,000.
As a non-employee, your clients should report all the money they gave for compensation and expenses on Form 1099-NEC.
You can deduct any additional ordinary and necessary business expenses that you would not bill a client for, such as home office, internet, cell phone, and overhead plus other expenses such as cash tips that you made not bill since you have no receipts.
From a tax standpoint, an S-corp can save you some money in self-employment tax. As an owner and employee of an S-corp, the owner’s portion is not subject to SE tax. However, you would have to put yourself on salary.
For example, if you charged $60,000 but believed you could hire someone to do comparable work for $50,000 then you could issue yourself a W-2 for $50,000. The remaining $10,000 would be S-Corp income not subject to SE tax.
The downside is that you would contribute less to Social Security, so your Social Security benefits at retirement would be lower.
However, you may be able to contribute a larger share of your income towards a self-employed retirement plan with an S-Corp.
See Retirement Plans for Self-Employed People.
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