Taxes for 1099 Employee

[john6221]

Hi. Question about taxes for a 1099- independent contractor. My spouse is in a profession where she works under someone else's license. As such, she only takes home 40% of her gross pay, as 60% is the cut that the company receives.

Just wondering, does that 60% count as a business "expense"? As in, it can be deducted from our taxes? Seems like it should, since there is no way she could work without paying it.

[dandarc]

Are you saying that your spouse receives $100 (for example) from the customer and then she sends the company $60? If so, then she's got $100 of revenue and $60 of expense on the schedule C. Net $40.

Another arrangement - company receives $100 and sends your wife $40. Your wife only received the $40, so she's only got $40 of revenue and 0 expense. Again net $40.

Either way, you're paying tax on the $40 less any other business expenses she may have paid.

[john6221]

Thanks for your help. It's pretty much your second option--the company receives $100, either from a co-pay, or insurance reimbursement. The company takes their cut, and gives her the $40.  Sounds like in either case, the taxable amount is the $40.

[dandarc]

Right - that's a more common arrangement - so her 1099 will almost certainly show $40, so no need to deduct the company's cut.

[Livingthedream55]

A 1099 employee has some potentials deductions  - I found this list online - maybe some ideas here:

https://blog.stridehealth.com/post/top-1099-write-offs