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Contract Labor Expenses (Line 11 of Schedule C)

Line 11 on Schedule C of the tax form relates to “Contract Labor,” which refers to payments made to individuals or businesses for services provided to your business.

Contract labor includes payments made to independent contractors, freelancers, and other non-employees who provide services to your business, but who are not considered employees for tax purposes. Examples of contract labor include payments made to graphic designers, web developers, writers, consultants, and other professionals who work on a project basis for your business.

On Line 11, you are required to report the total amount of payments made to contract labor during the tax year. You should report the total amount paid to each individual or business, regardless of whether they were paid in cash, by check, or through a payment processor such as PayPal.

It’s important to note that payments made to employees should not be reported on Line 11, but rather on Line 26 (“Wages”) of Schedule C. Additionally, the IRS has specific rules regarding the classification of workers as independent contractors versus employees, so it’s important to ensure that you are correctly classifying your workers to avoid potential tax penalties or legal issues. If you are unsure about how to classify a worker, it’s a good idea to consult with a tax professional or employment law attorney.