Business Expense

[pdsquash83]

Hello All,

I was recently hired as a 1099 contractor for a local hospital. I just received a check for a portion of my work and they paid me a total of $1800. They stated that I had billed out $2000 but they charged 10% for processing my billings.

Would the $200 of billing fees be considered a business expense for taxes?

Sorry for the basic question,

PD

[VagabondMD]

pdsquash83 wrote:

Hello All,

I was recently hired as a 1099 contractor for a local hospital. I just received a check for a portion of my work and they paid me a total of $1800. They stated that I had billed out $2000 but they charged 10% for processing my billings.

Would the $200 of billing fees be considered a business expense for taxes?

Sorry for the basic question,

PD

Click to expand...

If you agreed to billings minus expenses, that is what you are left with. Next time, get in writing the cost of billing. Depending on the type of work, 5-7% (even lower) is more typical.

They will issue a 1099 in early 2018 to you that likely reflects only what they paid you ($1800), and you will not be able to reduce your taxable amount by the additional $200, as it has already been "deducted".

[jfoxcpacfp]

pdsquash83 wrote:

Hello All,

I was recently hired as a 1099 contractor for a local hospital. I just received a check for a portion of my work and they paid me a total of $1800. They stated that I had billed out $2000 but they charged 10% for processing my billings.

Would the $200 of billing fees be considered a business expense for taxes?

 

Click to expand...

Concur with Vagabond MD

You can report either $2,000 less fees of $200 or $1,800. Whatever the 1099 reflects is what should go on your schedule C for IRS computer matching purposes.