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JCKunselman
New Member

As an independent contractor, LLC, my only contract pays me 75% of my invoice and keeps 25% for facilities use.

I coach a diving team at the local pool.

They collect the fees from my athletes and I invoice the pool to get paid.

My contract states that I receive 75% if what the pool collects from the athletes.

The other 25% is considered a facilities rental fee.

I never see the 25% that I pay in facilities rental fees.  Can I write any part of that off as a business expense to reduce my taxes owed?

4 Replies
tagteam
Level 15

As an independent contractor, LLC, my only contract pays me 75% of my invoice and keeps 25% for facilities use.


@JCKunselman wrote:

Can I write any part of that off as a business expense to reduce my taxes owed?


You cannot write off that part (i.e., deduct the 25% as a business expense) if you do not report it as revenue.

dmertz
Level 15

As an independent contractor, LLC, my only contract pays me 75% of my invoice and keeps 25% for facilities use.

If you are invoicing 100% and only receive 75% of that, it might be better to show the 100% invoiced as income and show 25% of that amount as a deductible business expense.  That way if you are ever audited you'll have tax reporting that matches your invoicing.

 

You should receive a Form 1099-MISC from the pool.  If it shows 100% of the amount invoiced, just enter the Form 1099-MISC enter 25% of that as a business expense.  If the Form 1099-R shows only 75% of what you invoiced, enter the Form 1099-MISC as received, enter the other 25% of the amount invoiced as cash or other income, then enter as a business expense 25% of the amount invoiced.  Ultimately, though, the result will be as tagteam indicates and only the 75% that is net profit will appear on Schedule C line 31.

Hal_Al
Level 15

As an independent contractor, LLC, my only contract pays me 75% of my invoice and keeps 25% for facilities use.

@dmertz - I think you meant form 1099-misc, rather than 1099-R

dmertz
Level 15

As an independent contractor, LLC, my only contract pays me 75% of my invoice and keeps 25% for facilities use.

Thanks Hal_Al.  I've made the correction.

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