topic 1099-NEC for subcontractor in Business & farm

1099-NEC for subcontractor

Vlaja — Sun, 14 Mar 2021 23:25:17 GMT

I received 1099-NEC for my contract and issued another 1099-NEC to my subcotractor. If I earned e.g. $100k for my contact and paid e.g. $10k to my subcontractor, when I enter 10k under Contract Labor, my tax goes down by ~2k. Is that all? Is there any other place/form where I can enter the amount that I paid to my subcontractor and deduct that amount from my earnings? Thanks!

Re: 1099-NEC for subcontractor

VolvoGirl — Sun, 14 Mar 2021 23:38:18 GMT

That's about right. You pay 15.3% SE tax on 92.35% of your Net Profit.

You were paying 100,000 x 92.35% x 15.3% = 14,130 SE Tax

Then on 90,000 you pay x 92.35% x 15.3% = 12,717 SE Tax

Re: 1099-NEC for subcontractor

npierson7 — Sun, 14 Mar 2021 23:42:54 GMT

It sounds correct. If you enter $10,000 under Contract labor, your income will be decreased by the amount and your tax liability will be decreased accordingly.

Re: 1099-NEC for subcontractor

VolvoGirl — Sun, 14 Mar 2021 23:43:23 GMT

Oh and that is in addition to the regular income tax on your total taxable income which includes the Net Profit.

You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040. It will be on Schedule 1 line 14 which goes to 1040 line 10a. And subtract the QBI Adjustment on 1040 line 13.