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Can I deduct from my taxes the workers compensation deductions I am forced to pay as an IC for the company I work for.

Forum|Forum|6 years ago
May 31, 2019
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The amount of the Workers Compensation is never listed on the 1099 I receive from the company I work for, so the only proof I have that it was paid was my last pay stub.

TurboTax Basic Windows

Best answer by SusanH

If you are an Independent Contractor and file a Schedule C then yes, you may deduct the cost of your Workers Compensation expense. You cannot however "double-dip".

If the amount that this particular company reports on your 1099-MISC is your contract amount in full {say $1000} then you can deduct your Workers Comp (WC) insurance {say $100} on your Schedule C as an expense.

If what was actually reported on the 1099-MISC was only $900 (in our example) and that's the amount you reported on your Schedule C then you couldn't also deduct the WC because you had never claimed that amount having been included as income.

The key is... if actual cash received (in our example) was $900 then you can claim $1000 in income and $100 in WC expense (Taxable $900). However, you cannot claim $900 in income and also deduct the $100 WC expense (Taxable only $800).

[updated 1/19/16 @ 1317PST]

How to get started entering the information for your Schedule C business

In your TurboTax Home & Business edition:

Click the Business tab, and Continue.
On the How do you want to enter your business income? screen:
Go through all areas sequentially by clicking Walk me through everything. under Guide me, or I'll choose what I work on under I'll explore on my own.
Choose your topics by clicking Start/Update and follow the prompts.

You can also use the TurboTax search box by entering Schedule C and clicking on the Jump to Schedule C link.

S

SweetieJean

Is it a policy you bought yourself, or through the company for whom you are working?
<a rel="nofollow" target="_blank" href="http://injury.findlaw.com/workers-compensation/workers-compensation-for-the-self-employed.html">http://injury.findlaw.com/workers-compensation/workers-compensation-for-the-self-employed.html</a>
and you do not get a "pay stub" if you get a 1099-MISC
Also see this:
<a rel="nofollow" target="_blank" href="https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee">https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee</a>

J

jerseyshore21Author

The company I am working for as an IC is taking the deductions out of my pay. I did not buy on my own. I work for other companies in the same capacity and they do not take WC out.

Lisa995

Is the amount on the 1099 they give you for the gross amount of compensation or the net (after they take out the WC)?

♪♫•*¨*•.¸¸♥Lisa♥ ¸¸.•*¨*•♫♪

macuser_22

Mandatory workers compensation insurance is normally withheld for employees, not independent contractors, but the law is a state law and is different in every state. In most states mandatory workers computation is a deductible state tax but that depends on state law.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

J

jerseyshore21Author

net after they take out the WC

J

jerseyshore21Author

sorry its gross not net

S

SusanHAnswer

If you are an Independent Contractor and file a Schedule C then yes, you may deduct the cost of your Workers Compensation expense. You cannot however "double-dip".

If the amount that this particular company reports on your 1099-MISC is your contract amount in full {say $1000} then you can deduct your Workers Comp (WC) insurance {say $100} on your Schedule C as an expense.

If what was actually reported on the 1099-MISC was only $900 (in our example) and that's the amount you reported on your Schedule C then you couldn't also deduct the WC because you had never claimed that amount having been included as income.

The key is... if actual cash received (in our example) was $900 then you can claim $1000 in income and $100 in WC expense (Taxable $900). However, you cannot claim $900 in income and also deduct the $100 WC expense (Taxable only $800).

[updated 1/19/16 @ 1317PST]

How to get started entering the information for your Schedule C business

In your TurboTax Home & Business edition:

Click the Business tab, and Continue.
On the How do you want to enter your business income? screen:
Go through all areas sequentially by clicking Walk me through everything. under Guide me, or I'll choose what I work on under I'll explore on my own.
Choose your topics by clicking Start/Update and follow the prompts.

You can also use the TurboTax search box by entering Schedule C and clicking on the Jump to Schedule C link.