My husband is a tattoo artist and makes 60% off each tattoo and the shop takes 40% of that, can we deduct the 40%?

[MichaelL1]

If he reports the 100% of the income then the shop charge of 40% is a deduction.

If he reports only the 60% he gets, then the 40% is not a deduction (as it was not part of income). 

[pbj123]

I have a question Michael. We are in the same boat here, but the boss buys some supplies. Can we still deduct 40% (or any %)? I keep running into answers ranging from maybe yes to mostly no. Since we can't account for the cost of supplies.

[DaveF1006]

You would only claim the supplies you purchase as an expense. Your boss will declare his own expenses he paid for out of his pocket on his own return. You will not report the money he spent anywhere in your return.because the supplies he purchased are accounted for in his 60% cut.

[pbj123]

Can he claim only the 60% of income? To account for the 40% he never sees?

[DavidD66]

If he only gets 60%, he should only claim that 60% as income.  If he claims the entire 100%, then he most definitely should deduct the 40% taken by the shop.

[VolvoGirl]

If he doesn't get a 1099Misc he can report it either way.  It will come out the same.....

report 100% and expense the 40% = 60% Net Profit 

only report the 60% & zero expenses = 60% Net Profit 

Plus he can Expense any actual expenses he pays out of pocket for.  

[pbj123]

Okay thanks guys! If he claims the 100% (we imported square earnings), where would be deduct the 40% cut? Under which category?

[VolvoGirl]

Probably as Commissions or you can enter it as Misc Other Expense.  Or how about booth rent?

[pbj123]

It looks like last year it was put under Rent or Lease -- Other Business Property.

A friend said to look at last year's taxes! Smart haha We are trying to do them ourselves this year 🙂

[ThomasM125]

The best thing to do would be to report the full amount billed as sales income and deduct the 40% as rent expense.

[pbj123]

Perfect! We did this. The rent we deducted under line 20b on the 1040. Thank you!

[KrisD15]

Yes, the IRS likes consistency, so it is always a good thing to report business income and expenses the same way year after year on your tax returns. 

[pbj123]

Good to know! So we did the same as last year according to last years returns. Hopefully this thread helps someone else too. 🙂 Thanks!

[Travstattoos]

Hello! 

Can I ask... when I added in the 35% given to the shop as a rent expense, Turbo tax said it was "high" for what artists usually pay for rent. Should I try and put it as a different expense? Will this raise flags even though turbo tax says my risk is low?  TIA