I have a day job and am working on a side project as a sole proprietor. I'm hiring some freelancers on oDesk to help me code the software. Assume I will still be a sole proprietor instead of incorporating a business (just too much hassle), can I claim the expense to these freelancers for tax deduction?
Yes, but make sure you issue a 1099 to these freelancers by 1/31/2016 or you may forfeit your ability to claim the expenses. You will probably need to collect a W-9 from each freelancer but also check with oDesk as they may have the necessary paperwork already in place for this exact reason.
Most importantly, consult with a trusted CPA to ensure you are completing all necessary forms correctly and following current IRS rules and regulations.
PS - I do this myself for my own business and it's quite simple and straight forward.