It seems that the dental clients I work with around Boston who work as associates are compensated in a similar fashion to you. I don't generally claim those lab fees as a deduction.

Let's say that your percentage of the collections due to you is $120k, and that your portion of the lab fees is $5k. That means you would have received checks totaling $115k as compensation, and you will also receive a 1099-Misc reflecting non-employee compensation of $115k.

What happens if you then deduct the lab fees of $5k against your 1099 income? You'll only end up paying taxes on $110k (less any other professional expenses you can come up with), even though you actually received $115k.

If the arrangement is reversed, where you receive the full $120k, and then reimburse the dental practice for $5k of fees, then I would say that you could deduct those lab fees on your tax return. That's the only way you would pay taxes on the amount you actually received - $115k.

I hope this answers your question.

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