Question

How to categorize subcontractor costs

Forum|Forum|4 years ago
January 22, 2022
1 reply
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I started a small construction company this year and have a few subcontractors that do work for me (all LLCs with their own employees). I sent each of them 1099-NECs, but I'm unsure how to categorize my subcontractor expense in TurboTax Desktop Business. I searched and received mixed results - COGS, "Common Business Expenses," and "Payments to Independent Contractors." I don't think the 3rd one applies because these are businesses providing services for my business... but maybe I'm wrong?

TurboTax Business Windows

VolvoGirl

Employee

Yes the third one is right. Independent Contractors. Whether you gave them a 1099NEC or not. You need to give a 1099 NEC or 1099 Misc to anyone you paid $600 or more to for the year. But not to corporations or for merchandise. You send the IRS a copy of the 1099Misc with the transmittal summary form 1096. These are due to the person by Jan 31 and to the IRS by Jan 31.

What kind of Business return are you doing? Are you a Single Member LLC S corp or Partnership, etc? If you are a Sole Proprietor it might be a disregarded entity and you file it on schedule C in your personal return, not in Turbo Tax Business.

M

mk402Author

Hi - Thank you! It's a 2 member LLC and I've read only TurboTax Business (Desktop) supports producing K1s.

VolvoGirl

Employee

Ok good. You need Turbo Tax Business to prepare the business return and K-1s. Just was checking. Sometimes people get confused what program they need. If this is your first year you probably should go to an Accountant to do it right .