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Question
I am a 1099 contract therapist for a local for-profit mental health agency. They take 40% of my billed services, acting more or less as a billing clearinghouse, that 40% being their fee. Can I deduct this cost on my Schedule C?
Answer

Absolutely! The fee they charge is a cost of doing business, so it’s a legitimate write-off. The only caveat is that you need to report your gross_income on line 1 of the Schedule C.

Gross income would be the entire amount you billed for your services before the 40% cut from the agency. Report this expense on line 10 of your Schedule C, “Commissions and Fees."

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Answer

Absolutely! The fee they charge is a cost of doing business, so it’s a legitimate write-off. The only caveat is that you need to report your gross_income on line 1 of the Schedule C.

Gross income would be the entire amount you billed for your services before the 40% cut from the agency. Report this expense on line 10 of your Schedule C, “Commissions and Fees."

No answer given yet!

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Keeper is a delightfully smart tax filing software that's especially useful for people with 1099 contracting and freelance income. Our blog breaks down IRS guidance with real-world examples and analysis by tax professionals — empowering taxpayers to save money and take control of their finances.

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