I'm dealing with this exact situation right now! I received about $850 total from various companies for completing coding challenges and design mockups during interviews last year. None of the companies sent me 1099s, but I kept detailed records of all the payments in a spreadsheet. Based on what I'm reading here, it sounds like Schedule C is definitely the way to go. For my situation, I think I'll use "Computer Systems Design Services" as my business code since most of the work was software development related. One thing I'm wondering about - can I deduct the time I spent on unpaid take-home assignments if they were part of the same interview processes? I probably spent 20+ hours on unpaid coding tests for every 1 hour of paid work. Obviously I can't deduct my time, but what about any resources or tools I purchased specifically for those interview processes? Also, does anyone know if there's a threshold where this stops being considered self-employment and becomes something else? Like if I only made $100 total instead of $850, would the same rules apply?

This is such a common situation that more people should know about! I went through the exact same thing last year with UX design trial projects. After lots of research and even consulting with a tax professional, I can confirm that Schedule C is definitely the right approach. For your "principal business or profession," don't overthink it - just use whatever type of work you were actually doing in these trials. So if you were doing marketing work, put "Marketing Consultant." If it was software development, use "Software Developer" or "Computer Programmer." The IRS cares about the nature of the work you performed, not your employment status. One important thing I learned: even though these payments feel different from "real" freelance work, the IRS treats them the same way. You were providing services and getting paid for them, which makes it self-employment income regardless of the context. The good news is that using Schedule C lets you deduct any legitimate business expenses related to completing these trials - things like software subscriptions, materials, or even a portion of your internet bill if you used it specifically for the work. Keep detailed records of everything, especially since you didn't receive 1099s for smaller payments. Don't let the business terminology on Schedule C intimidate you. Even a single paid project counts as business activity in the IRS's eyes.

This thread has been incredibly helpful! As someone who's been researching NIL tax strategies for my nephew (who's starting to get some decent deals), I wanted to add one consideration that might be relevant - the timing of when to make the S-corp election. If your roommate decides to move forward, he needs to file Form 2553 within 2 months and 15 days of the beginning of the tax year he wants the election to be effective. Since we're already in April, if he wants S-corp treatment for 2025, he'd need to file the election by March 15th of next year for it to be effective for 2025 (assuming he incorporates before then). However, there's also the option to make a "late election" with reasonable cause, but that gets more complicated and isn't guaranteed to be accepted by the IRS. Given all the great advice in this thread about reasonable compensation (sounds like 50-65% salary is the sweet spot), quarterly taxes, and compliance considerations, it might make sense for him to get everything properly set up now and make the election effective for 2026. That would give him time to work with a qualified tax professional, establish proper bookkeeping systems, and really understand all the administrative requirements before diving in. The potential tax savings at his income level definitely justify the complexity, but doing it right from the start is crucial!

Great question about the timing implications! If an athlete incorporates late in 2025 but waits until 2026 to make the S-corp election, yes, the corporation would be taxed as a C-corp for that partial 2025 period. However, for a single-member entity with relatively straightforward income, this usually isn't a major issue as long as you don't leave profits sitting in the corporation at year-end. The key is to zero out the corporate income through reasonable compensation payments before December 31st. Any remaining profits would be subject to corporate tax rates, but for most NIL situations where the athlete is actively involved in earning the income, paying it all out as salary is typically reasonable and avoids the double taxation issue. Regarding timing the incorporation around income patterns - this can definitely be strategic! If most NIL deals pay out during football/basketball season, incorporating right before that heavy period maximizes the time operating under the more favorable structure. Just remember that you still need to maintain that "reasonable compensation" throughout the year, so don't try to bunch all the salary payments into one quarter just to time the incorporation. One additional consideration: some NIL deals are structured as annual contracts with monthly payments. If that's the case for your roommate, the timing matters less since the income flow is more consistent throughout the year.

As someone who's dealt with multiple K-1 trust terminations over the years, I wanted to add one more practical consideration that hasn't been mentioned yet - timing your other tax decisions around this situation. If you know you're receiving a K-1 with Box 11 excess deductions, it might affect other tax planning decisions for the year. For example, if you're close to retirement and have flexibility in when to take certain distributions or make Roth conversions, the Box 11A deduction (which reduces AGI) could create a window for more tax-efficient moves. The Box 11A amount goes directly to Schedule 1 and reduces your AGI, which can have cascading effects on other AGI-based calculations like IRMAA Medicare surcharges, net investment income tax thresholds, or qualification for various tax credits. I've seen situations where people received substantial Box 11A deductions from trust terminations and were able to time other income or deduction decisions to maximize the overall tax benefit. It's worth looking at your complete tax picture for the year, not just the K-1 in isolation. Of course, this only applies to the Box 11A portion - Box 11B doesn't affect AGI whether you use it or not. But that AGI reduction from Box 11A can be quite valuable for overall tax planning if you're strategic about it. Just another angle to consider as you work through these decisions!

As a newcomer to this community who just received my first K-1 from a terminated trust, I want to thank everyone for this incredibly comprehensive discussion! Reading through all these experiences has been like getting a masterclass in trust taxation. I was initially panicking about potentially "losing" my Box 11B deduction by taking the standard deduction, but after working through the math using the approach several people suggested, it's clear that the standard deduction is still much more beneficial overall. The Box 11A deduction on Schedule 1 is really the key piece I need to focus on. What helped me most was understanding that these aren't arbitrary IRS rules - they reflect the actual tax character of the underlying expenses from the trust level. Once I grasped that Box 11A represents "above-the-line" type expenses while Box 11B represents "itemized" type expenses, everything made sense. I've now calculated both scenarios, confirmed I'll report Box 11A on Schedule 1 line 24k with proper documentation, and requested a copy of the trust's final Form 1041 for my records as Diego suggested. The strategic planning considerations that Luca mentioned about AGI impacts are also something I'll discuss with my tax preparer. This community's combination of practical experience and technical expertise has transformed what seemed like an impossible situation into something I can handle confidently. Thank you all for sharing your knowledge so generously!

As someone who's been freelancing in video editing for about 18 months now, I can share some real numbers. My effective tax rate ended up being around 18% of gross income after all deductions last year. Key deductions that made a big difference for me: - Home office (about 15% of my rent/utilities) - Equipment depreciation on my editing rig and monitors - Adobe Creative Suite and other software subscriptions - External storage and backup solutions - Partial car expenses for client meetings - Professional liability insurance The biggest surprise was how much the home office deduction helped - I have a dedicated editing room, so I can legitimately deduct that percentage of all housing costs including rent, utilities, even renter's insurance. I'd recommend setting aside 25% of each payment when starting out. Better to have a cushion than scramble to pay quarterly taxes. Once you get a feel for your actual effective rate after the first year, you can adjust accordingly. Also consider making estimated payments slightly higher than required - any overpayment becomes a refund, and it's better than owing penalties for underpayment.

One thing I wish I'd known before going freelance - don't forget about quarterly estimated tax payments! The IRS expects you to pay as you go, not just once a year. If you owe more than $1,000 when you file, you could face underpayment penalties even if you pay everything by the April deadline. The due dates are January 15, April 15, June 15, and September 15. I use Form 1040ES to calculate what I owe each quarter. Pro tip: if you had W-2 income the previous year, you can base your estimated payments on 100% of last year's tax liability (110% if your AGI was over $150k) and avoid penalties even if you end up owing more. For video editors specifically, income can be pretty irregular - some months feast, some months famine. I found it helpful to set aside 25-30% of every payment into a separate tax savings account, then make estimated payments from there. Takes the stress out of those quarterly deadlines when you know the money is already saved up.

I had a very similar issue with my 2024 return! TurboTax kept blocking me from filing because of the Form 4684 delay, even though my hurricane damage was from 2017. I spent way too much time researching this before realizing the software was just being overly broad with its questions. The key thing to understand is that the current Form 4684 delays only affect specific disaster provisions that were updated for recent disasters (mainly 2023-2024). If you already claimed all your Hurricane Florence losses on your 2018 return and have no new casualty losses for 2024, you can safely answer "No" to the disaster question. I changed my answer and filed without any problems. The IRS isn't going to flag you for not reporting a disaster that was already fully handled on a previous year's return. Sometimes tax software errs on the side of asking too many questions rather than missing something, but in this case it's just creating unnecessary confusion for people whose disasters were properly reported years ago.

I went through this exact same frustration last year! The Form 4684 delay message in TurboTax can be really misleading when it applies to older disasters that were already properly reported. From what you've described, since you already claimed all your Hurricane Florence losses on your 2018 return and there are no ongoing insurance settlements or newly discovered damage, you should be able to change your answer to "No" on the disaster question without any issues. The current Form 4684 delays are specifically related to updates for certain 2023-2024 disasters, not older ones like Hurricane Florence from 2018. Tax software sometimes casts a wide net with these screening questions, but if your disaster was fully resolved years ago, there's no need to involve Form 4684 on your current return. I'd recommend going back in TurboTax, changing that disaster answer to "No," and filing your return. You won't miss any deductions since you already took them in the correct year, and you'll avoid unnecessary delays waiting for form updates that don't even apply to your situation.