My husband works as an instructor for an educational company, as an independent contractor. The company invoices the students. When he is paid by the company for his teaching fee it is reduced by the price of classroom materials given to the students by the company. Is that cost of materials an expense to our business?
It's not. The fact is EduCo is paying you, say, 950 units.
It doesn't make any difference what their "rationale" is in paying you 950.
For example, EduCo may say ...
"It's been a tough year so we're only paying you 950, take it or leave it"
"As an amazing employee, we're giving you much more than anyone else, here's 950"
"Electricity and printing is costing us a lot of money this year. We're only gonna pay you 950"
"You were late on four occasions so we're only giving you 950"
"Your classes have the best growth so we're giving you 950"
And so on.
I'm sure that, if the company gets say 2000 units from students, the company surely "takes out" quite a few items, before paying some to Husband.
Your accounting "doesn't care" what their reason is for "taking some out", or adding a bonus, or anything else. The fact is Husband's income is .. "950". And that's that.
"Since our compensation is reduced, we are "buying" these materials from the company..."
But they are not paying you that amount.
Say they paid you 500. (You get a cheque for 500.) Then SAY you have to buy something for 35.
In your accounting/taxes your income is indeed 500.
And yes - you have a deduction of 35.
Your income was not 500. It was 465. There's nothing to deduct as you paid for nothing.
I hope it makes sense! :)
"Would it make any difference if we purchased the materials separately from the classes taught?
That would be completely, utterly, different in every way and would have no connection at all to this question. Totally different issues would apply.