If I do some 1099 work, and I outsource it to someone and pay them (subcontract them, if my understanding is correct), can I write off their pay as an expense so I only pay taxes on the money I keep?

Yes, exactly right. If you pay someone to do work on your behalf, their pay is a deductible business expense. You only owe self-employment and income tax on your profit (what you collected minus what you paid out).

For example: you get paid $5,000 for a project and pay a subcontractor $3,000 to do the work. You'd report $5,000 as income and deduct $3,000 as a contractor expense, leaving $2,000 of taxable profit. That's the correct way to handle it.

One important admin note: if you pay any single subcontractor $2,000 or more in a calendar year, you're required to issue them a 1099-NEC by January 31 of the following year. To do that, you'll need their name, address, and Social Security or EIN number, so collect a W-9 from them before you pay them. Failing to issue required 1099s can result in penalties, and the IRS may disallow the deduction.

Also make sure you're keeping records of what you paid them (invoices, bank transfers, etc.) in case you're ever asked to substantiate the deduction.

So yes, subcontractor pay is one of the cleanest deductions out there. You're thinking about this exactly the right way.

Just as a final note, the IRS has raised the threshold for reporting nonemployee payments from $600 to $2,000. This new threshold is effective January 1, 2026.