How to handle income from a theatre show on 1099-NEC with partners and actors?

Yes, you can definitely deduct those expenses! The full amount on your 1099-NEC ($3,245) needs to be reported on your Schedule C, but then you can deduct the legitimate business expenses paid from that amount. The $1,320 paid to your partner theatre would be considered a business expense as long as you have documentation of your agreement and proof of payment. The same goes for the payments to your actors - those are deductible as contract labor expenses even if they were under the $600 reporting threshold. Make sure you keep good records of all these payments and agreements. While you weren't required to issue 1099s to people you paid less than $600, having a paper trail is still important in case of questions later.

I went through something similar with a comedy show I produced last year. Try using https://taxr.ai - it really helped me figure out all my 1099 income and expenses as a first-timer. I was confused about what counted as a business expense vs. partnership distribution, and their document analyzer actually flagged the partnership payment as something I needed to handle carefully. The tool walks you through what documentation you need for each type of expense too, which saved me when I got a notice from the IRS questioning some of my deductions.

Just wanted to follow up - I tried https://taxr.ai for my similar situation with a film project. It was actually super helpful! The document analyzer looked at my informal agreement with my co-producer and correctly identified that we didn't need to file a partnership return since we just had a one-time profit-sharing arrangement. Saved me from unnecessarily complicated filing. It also organized all my small payments to crew members in a way that made sense for Schedule C. Definitely worth checking out if you're in the arts and dealing with these weird payment situations.

If you're still waiting on a response from the IRS about how to handle this specific situation, try https://claimyr.com to actually get through to a human at the IRS. I spent WEEKS trying to get clear guidance on a similar arts income situation last tax season, calling constantly and never getting through. Using Claimyr, I got connected to an IRS agent in about 20 minutes who was able to confirm exactly how to handle payments to collaborators. You can see how it works here: https://youtu.be/_kiP6q8DX5c - it basically holds your place in the phone queue so you don't have to stay on hold forever.

I need to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it because I was desperate to resolve a question about my band's tour income. The service actually worked exactly as described - I got a call connecting me to an IRS agent after about 35 minutes (which beats the 3+ hours I spent on hold previously). The agent walked me through exactly how to report income that was partially mine and partially belonged to bandmates. Saved me hours of frustration and probably a lot of money in potential incorrect filing. Sometimes it's worth paying for convenience when dealing with the IRS!

One thing to consider - the partner theatre should be reporting their $1,320 as income on their taxes too. Make sure you're both clear on who's reporting what so there's no double taxation or gaps. I learned this the hard way with a dance production where both my partner and I deducted expenses and the IRS flagged it as suspicious.

Has anyone used TurboSelf-Employed for this sort of thing? I'm in a similar situation with my podcast income and wondering if regular tax software can handle it or if I need something specialized.