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    gpearson's Avatar
    gpearson Posts: 1, Reputation: 1
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    #1

    May 11, 2017, 09:19 AM
    Service Fee Deductible?
    I am a contractor for IT services.
    Two of the companies I do work for charge a 10% fee, deducted from what I am paid. These companies (comp A) find work, offer it, I (me) bid on it, if the end customer (comp B) accepts the bid I (me) do the work and the comp A takes 10% from what comp B pays. Comp A pays me, comp B pays comp A.

    Is that service fee deductible for a small business? If so, does it fall to the Professional Services deduction?

    Thank you
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    May 11, 2017, 11:21 AM
    To keep this simple let's suppose that Company B pays $100 to Company A, and then Company A pays you $90. Does Company A issue you a 1099 to document what they paid you? If so, the amount they show you received should be the $90, which you report to the IRS as revenue, in which case you do not deduct the $10 fee.
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