Financial Products

Financial Products

Questions about financial product options? Find discussions around a wide variety of financial service products here. Looking for your first debit card or a seasoned saver looking for tips to build your bank account, this is a great place to share and learn.

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Valued Pioneer
Posts: 4
Registered: ‎03-19-2017

reimbursed money deductions

I'm a self-employed contractor and receive 1099-misc's. When I get paid the bill includes my time for labor AND re-imbursement of money for materials I paid for. So the customer is refunding any money I expended to complete the job. This is the focus of my question: "is this refunded money which is included in the final payment deductible?". If so what form should I use to declare it and under what 'line number'? Thanks again.

Tax Pro
Posts: 5,539
Registered: ‎02-23-2016

Re: reimbursed money deductions

[ Edited ]

Hi,

 

Materials are an expense that is deductible against your 1099-MISC income on Schedule C.  Your 1099-MISC income can and usually will include costs that you incur because those costs are part of what the client pays for.  You are only taxed, however, on your NET income, which is equal to your total 1099-MISC income less your expenses.

 

The materials cost can be deducted on Line 22 of Schedule C (supplies).

 

What you're charging for your time (labor) is income to you and is not deductible.  If you were paying someone else to work for you then you would have a deductible labor expense.

 

Louis,

Senior Tax Advisor (Tampa, FL)

Pioneer
Posts: 1
Registered: ‎04-08-2017

Re: reimbursed money deductions

We have the same situation. I am piggy backing on this because the format has changed on the H & R Block program. Do I need to create "materials", "supplies", etc.? and enter the totals only?

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Valued Pioneer
Posts: 4
Registered: ‎03-19-2017

Re: reimbursed money deductions

[ Edited ]

Good Day DLilyPad- as Louis answer states: "on Line 22 of your Schedule C Form" enter the dollar amount for  'ALL' supplies and/or materials that you expended money for a job and then were reimbursed for. Hope this helps.