Contract Labor, What You Pay Contractors, Goes on Schedule C Line 11
Schedule C is the tax form you fill out for your business. You put what you pay independent contractors, like a subcontractor or a freelancer, on line 11, which the form calls "Contract labor." These are people who work for you without being your employees. You write off the full amount.
These go on line 11, "Contract labor"
- Subcontractors you hire for a job
- Freelancers, like a designer or a writer
- A virtual assistant
- Consultants who work on your business
These do not go on line 11
- Pay for your employees Line 26
- Your accountant or lawyer Line 17
- A contractor who repairs your equipment or building Line 21
- Commissions you pay, like a sales commission Line 10
These are not a write-off
- What you pay yourself
Updated by Doug, owner of Shoeboxed. Rules from the IRS Schedule C instructions.
Why these payments to workers do not go on line 11
Line 11 on the 2026 Schedule C
This is the 2026 IRS Schedule C. Line 11 is boxed in blue. The other lines this page names are shaded blue.
Your employees' pay goes on line 26
Wages go on line 26. Your employees get a Form W-2 from you. Contractors get a Form 1099-NEC, explained below. The IRS decides if a worker is an employee or a contractor mostly by how much control you have over the work, like when, where, and how it gets done. If you are not sure, read the IRS page on independent contractors and employees, or ask your tax preparer.
Your accountant or lawyer goes on line 17
The IRS puts fees for accountants and lawyers on line 17, "Legal and professional services." That includes having your business tax forms prepared. The instructions for line 11 say to leave these out of contract labor.
A contractor who repairs your equipment or building goes on line 21
A plumber, an electrician, or a handyman who fixes something for your business goes on line 21, "Repairs and maintenance," with the parts. See which business repairs go on line 21.
Commissions you pay go on line 10
Sales commissions you pay go on line 10, "Commissions and fees."
What you pay yourself is not a write-off
Money you take out of your business for yourself is still profit, not a business cost. The IRS says to leave it off every expense line, including line 26 for wages. You pay income tax and self-employment tax, which is your Social Security and Medicare, on the profit instead.
Paid a contractor $2,000 or more in 2026? File a Form 1099-NEC, unless you paid by card
A Form 1099-NEC is the form that tells the IRS what you paid a contractor. For payments you make in 2026, you file one for each contractor you paid $2,000 or more during the year. For payments in 2025, the amount was $600.
You send the form to the IRS and give a copy to the contractor by January 31 of the next year. When January 31 falls on a weekend or a holiday, the date moves to the next business day.
Before you pay a new contractor, ask them to fill out a Form W-9. It gives you their name, address, and tax ID number, and you need those for the 1099-NEC.
You usually skip the 1099-NEC when the contractor's business is a corporation. Their Form W-9 tells you. Lawyers are the exception, and a lawyer's firm gets one even when it is a corporation.
You also skip it when you paid by credit card or debit card. The card company reports those payments to the IRS on its own form.
Where 4 common payments to workers go on Schedule C
Say you run a lawn care business. Here are four people you paid in 2026. The amounts are an example.
| Who you paid in 2026 | Cost | Where it goes on Schedule C |
|---|---|---|
| A subcontractor who does your tree work, paid by check | $6,500 | Line 11, and you file a 1099-NEC |
| A helper on one big job, paid by check | $900 | Line 11, and no 1099-NEC because it is under $2,000 |
| A sprinkler contractor for a customer's yard, paid by credit card | $2,800 | Line 11, and no 1099-NEC because you paid by card |
| Your accountant | $1,200 | Line 17, Legal and professional services |
Line 11 gets $10,200 for the tree work, the helper, and the sprinkler contractor. You file one Form 1099-NEC, for the tree work. The accountant's $1,200 goes on line 17.
Upwork and Fiverr receipts for work on your business go on line 11
103 Shoeboxed customers had receipts from Upwork, Fiverr, TaskRabbit, or a similar site for hiring freelancers, from November 2025 to October 2026. A typical receipt came to $58, and half of them cost between $18 and $186.
Those customers filed the receipts under many different categories. Only a few picked a contract labor category. The category you pick in Shoeboxed doesn't change the line on Schedule C. If the receipt paid a freelancer for work on your business, it goes on line 11.
Shoeboxed freelancer site receipts, November 2025 to October 2026
1,128
freelancer site receipts
103
Shoeboxed customers with one
$58
for a typical receipt, where half cost more and half cost less
$18 to $186
half of all receipts cost between these two amounts
Shoeboxed counted the receipts customers uploaded from November 1, 2025, to October 31, 2026, from Upwork, Fiverr, TaskRabbit, Toptal, 99designs, Freelancer.com, OnlineJobs.ph, and PeoplePerHour, matched by store name, in any category. Each site alone has too few customers to show, so we show them together. "Typical receipt" is the median, where half cost more and half cost less. The dollar figures use the 1,124 receipts with a total on them.
Keep each contractor invoice and proof of payment for 3 years after you file
The IRS wants a record of each write-off, and in most cases you keep it for 3 years after you file. For a contractor, keep the invoice and the proof you paid it, like a canceled check.
Snap each paper invoice with the Shoeboxed app, and forward the ones that come by email. Snap each contractor's Form W-9 too, so it is ready in January when the 1099-NEC is due. We keep everything for as long as you have an account, and you can invite your bookkeeper in to see it.
Every Shoeboxed plan comes with a 30-day, 100% money-back guarantee. See the plans.
7 common questions about contract labor on Schedule C
Payments to independent contractors go on line 11, "Contract labor." That means people who do work for your business without being your employees, like a subcontractor, a freelancer, or a virtual assistant. Pay for your employees goes on line 26. Your accountant and lawyer go on line 17. A contractor who repairs your equipment or building goes on line 21.
Keep every receipt for your business in one place with Shoeboxed
Snap them with the app, forward the ones that come by email, or mail the paper ones to us in a Magic Envelope. We keep them all, ready for your accountant.
See how Shoeboxed keeps your receipts