Q: The company I am contracted with deducts their commission from my earnings,can I still claim that as a business expense?
I am a contracted 1099 worker and the company I work for deducts their commission/service fee off my check (I Pay them a percentage for their services). At the end of the year it is not reflected in my earnings so it lowers my taxable income. I have other expenses through them that ARE reflected in my earnings which I do take as deductions. My question is…can I still use that commission I pay them as a deduction on my taxes even though it’s not reflected in my earnings? Or would that be like a double deduction since they have already deducted it from my gross, decreasing my taxable income?
I.e. my actual gross is $10,000. Their commission taken is $2,000. My 1099 gross earnings are $8,000 (gross-commission). Since commission is already deducted from my 1099 gross earnings, can I still claim that $2,000 as a business expense deduction on my taxes?
Also, can I refile for the past two years if so?
Thanks!
A: Yes, you can typically claim the commission you pay to the company as a business expense deduction on your taxes, even if it's not reflected in your earnings on the 1099 form. It's not considered a double deduction because you are essentially reporting your gross income and then deducting legitimate business expenses, which include the commission fees. You may also consider amending your tax returns for the past two years to claim these deductions if they were overlooked in previous filings. Consulting with a tax attorney or accountant can help ensure you navigate this process correctly.
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