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, legitimate, documented, expenses are written off against that income.


If it's a legitimate cost of doing business, it's as deductible as any other cost of doing business. (Reminder: be careful about the distinctions between employee and contractor; the IRS gets annoyed if you don't handle this correctly.)


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.

  • 1
    Doesn't oDesk act as agent, looking like one vendor regardless of how many workers there are? Jun 7 '15 at 16:40
  • I believe so. I mentioned issuing the 1099 to each freelancer in case he uses anyone out side of oDesk.
    – etipaced
    Jun 9 '15 at 12:46

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