I am a plumbing contractor, and most of my 1099 "income" is actually the cost of materials, which I have already paid taxes on and do not mark up for my customer. Therefore, the customer is basically "reimbursing" me for these costs- it is not income. I've tried to enter these as expenses, but it doesn't deduct them 100%- I don't know if I am entering them in the right place.(I am filing for 2017)
They don't reduce your tax due 100%. They only reduce the Net Profit on Schedule C. So you owe less self employment tax on it.
by the way. if you deducted these in a previous year, you can't deduct them again.
many schedule C taxpayers can and do use the cash basis method of accounting. income is taxable in the year received and expenses are deductible in the year paid.
say you do use the cash basis. in 2017 you buy a faucet but you don't use it on a job until 2018. it should be expensed in 2017. and so whatever you get from customer in 2018 is fully taxable. you can't deduct the cost of the faucet again.