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rthayes5
New Member

I have 2 jobs. I receive w-2's for both jobs. For one job I subcontract someone else to do some of it. Can I claim this as an expense? If yes, how do I do so?

 
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ThomasM
New Member

I have 2 jobs. I receive w-2's for both jobs. For one job I subcontract someone else to do some of it. Can I claim this as an expense? If yes, how do I do so?

Just so I'm clear, when you say you receive "W-2s" for both jobs, do you mean an actual W-2 as an employee, or a 1099-MISC as a contractor?  I ask because folks often use the term "W-2" to include 1099 forms, and you've described the expense of "contract labor" which is an expense for self-employed people rather than W-2 employees.

Let's take the easy scenario first.  If you're a self-employed person paid on a 1099 for each of these jobs, then subcontracting out certain work and claiming it as an expense is perfectly acceptable.  You'll enter that in TurboTax in the Business Expenses section by clicking on Other Common Business Expenses and selecting "Contract Labor" from the list.

The other scenario -- I would call it odd -- would be that you're actually a W-2 employee, yet you contract out a portion of your job.  I would say that it's not deductible since it goes against the very notion of an "employee."  If management requires contract labor, then management contracts it, or at the very least, reimburses you for it.

Here's how IRS Publication 529 describes employee expenses:

"You can deduct only unreimbursed employee expenses that are: 

  • Paid or incurred during your tax year,

  • For carrying on your trade or business of being an employee, and

  • Ordinary and necessary.

An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary."

If you truly are a W-2 employee, and you (and your boss) can make the case that this expense is "ordinary & necessary" for your job, then you'll enter it this way:  Federal Taxes (or Personal in TurboTax Self-Employed) > Deductions & Credits > Employment Expenses > Job Expenses for W-2 Income.  You'll advance thru this section until you come to the write-in grid where you can enter a description and amount.

That's a tough argument to make, however.

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2 Replies
ThomasM
New Member

I have 2 jobs. I receive w-2's for both jobs. For one job I subcontract someone else to do some of it. Can I claim this as an expense? If yes, how do I do so?

Just so I'm clear, when you say you receive "W-2s" for both jobs, do you mean an actual W-2 as an employee, or a 1099-MISC as a contractor?  I ask because folks often use the term "W-2" to include 1099 forms, and you've described the expense of "contract labor" which is an expense for self-employed people rather than W-2 employees.

Let's take the easy scenario first.  If you're a self-employed person paid on a 1099 for each of these jobs, then subcontracting out certain work and claiming it as an expense is perfectly acceptable.  You'll enter that in TurboTax in the Business Expenses section by clicking on Other Common Business Expenses and selecting "Contract Labor" from the list.

The other scenario -- I would call it odd -- would be that you're actually a W-2 employee, yet you contract out a portion of your job.  I would say that it's not deductible since it goes against the very notion of an "employee."  If management requires contract labor, then management contracts it, or at the very least, reimburses you for it.

Here's how IRS Publication 529 describes employee expenses:

"You can deduct only unreimbursed employee expenses that are: 

  • Paid or incurred during your tax year,

  • For carrying on your trade or business of being an employee, and

  • Ordinary and necessary.

An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense doesn't have to be required to be considered necessary."

If you truly are a W-2 employee, and you (and your boss) can make the case that this expense is "ordinary & necessary" for your job, then you'll enter it this way:  Federal Taxes (or Personal in TurboTax Self-Employed) > Deductions & Credits > Employment Expenses > Job Expenses for W-2 Income.  You'll advance thru this section until you come to the write-in grid where you can enter a description and amount.

That's a tough argument to make, however.

rthayes5
New Member

I have 2 jobs. I receive w-2's for both jobs. For one job I subcontract someone else to do some of it. Can I claim this as an expense? If yes, how do I do so?

Thank you.  Yes, both are W-2.  I work remotely so my boss is unaware that I am paying someone to do a portion of the job.  I was doing as you suggested, however, was not getting benefit from the deduction because of AMT.  If we ran the W-2 job as 1099 instead those deductions could come off the top and not subject to AMT.  Thanks for your response.
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