Can I deduct expense a client pays me to cover?

[lc03]

I own a website design agency and pay for monthly hosting for websites for my clients. I then charge them a fee for hosting and maintenance and they pay me monthly. Can I deduct the cost that I pay to host all the websites as a business expense under something like software expense?

And would that mean all of what they pay me is monthly income and I deduct the cost I pay to the website hosting service?

[JohnB5677]

Yes, you should be filing your taxes with a Schedule C that provides for Self-Employment.  You're correct that the fees the clients are paying you will be included as revenue on the Schedule C.

Yes, you can deduct the cost I pay to the website hosting service, and if the deductions qualify, there may be other expenses that you can use as business.

Some may include:

• Business use of a cell phone.
• Your personal computer (used for business).
• Home Office   IRS reminds taxpayers of the home office deduction rules.
• Office supplies

Also remember that you will not only be subject to income tax.  You will also owe self-employment tax.

The self-employment tax rate is 15.3%. That rate is the sum of 12.4% for Social Security and 2.9% for Medicare.