Can I Deduct Freelance or Contractor Payments?

If you pay someone else to do work for your business, those payments are generally deductible. Amounts paid to freelancers, independent contractors, and subcontractors for services rendered to your business are ordinary and necessary business expenses. If you pay a single contractor $600 or more during the year, you are generally required to issue them a Form 1099-NEC to report those payments to the IRS. Failing to issue a required 1099 does not eliminate your deduction, but it can create penalties. Keeping records of all contractor payments including the amount, purpose, and the contractor's information makes tax time easier.