Just wanted to add a practical tip that's helped me in similar situations - consider having a direct conversation with your employer about switching to proper business payments. You could frame it as "I need proper documentation for my taxes" rather than accusing them of anything shady. Many small business owners genuinely don't realize the tax implications of using F&F payments. Some are willing to switch to proper 1099 reporting once they understand it protects both of you. If they refuse or get defensive, that tells you a lot about their intentions. In the meantime, definitely keep detailed records as others have mentioned. I use a simple spreadsheet with date, amount, and brief description of work performed. Also consider opening a separate checking account just for this income - it makes tracking much easier come tax time.

I've been through this exact situation and understand how stressful it can be! The good news is that you absolutely can handle this correctly without an accountant. Here's what I learned: You'll report this income on Schedule C (self-employment) since you're being treated as an independent contractor. The IRS doesn't care HOW you were paid - cash, Venmo, check, whatever - income is income and must be reported. Keep meticulous records: screenshot every Venmo payment, note the dates and amounts, and write down what work you did for each payment. This is your paper trail. Also save receipts for ALL work-related expenses - cleaning supplies, gas for driving between jobs, even a portion of your phone bill if you use it for work coordination. One thing that really helped me was setting aside 25-30% of each payment in a separate savings account for taxes. Since nothing is being withheld, you'll owe both regular income tax AND self-employment tax (15.3% for Social Security/Medicare). This prevents a nasty surprise at tax time. Don't let your employer's sketchy payment method put YOU at risk with the IRS. Report your income properly and you'll be fine!

Don't forget about the income threshold phase-outs for Section 179! If your business income is too high, the deduction starts to phase out. For 2023, the deduction starts to phase out dollar-for-dollar when total qualifying equipment purchases exceed $2,890,000. Also, Section 179 is limited to business income, while bonus depreciation (100% through the end of 2022, now 80% for 2023) doesn't have the same limitation. Depending on your business income level, bonus depreciation might be more advantageous in some cases.

This is exactly the kind of tax planning headache that keeps business owners up at night! I went through something similar with our family LLC last year. One thing that helped clarify the situation was getting copies of IRS Revenue Ruling 2013-14, which specifically addresses how Section 179 deductions flow through to grantor trust beneficiaries. The key distinction is that while your revocable living trust may technically be the "shareholder," for tax purposes you (as the grantor) are considered the true owner. This means the Section 179 deduction should flow through to your personal return just as if you owned the S Corp shares directly. However, I'd strongly recommend documenting this properly. Make sure your trust documents clearly establish grantor trust status, and consider having your tax preparer include a brief statement with your return explaining the pass-through treatment. The IRS likes to see clear documentation trails, especially with larger deduction amounts like your $145k equipment purchase. Also worth noting - if you're planning more equipment purchases in the future, you might want to consider the timing. The annual Section 179 limit for 2023 is $1,160,000, so you're well within the threshold, but planning ahead can help optimize your deductions across multiple tax years.

Has anyone else noticed that production companies are doing this W-2 to 1099 switch to save themselves money while screwing us workers? They're not paying their half of Social Security and Medicare anymore, and we're absorbing all that cost. This trend is destroying the industry.

The S-Corp option that Madison mentioned is definitely worth considering if you're making good money, but don't overlook the simpler steps first. Since you're new to 1099 work, I'd recommend starting with basic expense tracking and quarterly payments before jumping into more complex business structures. One thing I learned the hard way - keep separate bank accounts for business and personal expenses right away, even if you don't form an LLC yet. It makes tax time so much easier and the IRS loves clean separation of business finances. You can open a simple business checking account as a sole proprietor without forming any entity. Also, since you mentioned doing 15-18 gigs monthly, you might want to negotiate your rates up a bit if possible. Production companies switching to 1099 are saving 7.65% on payroll taxes (their half of Social Security/Medicare) plus unemployment insurance and workers comp. That's money that should ideally be reflected in higher contractor rates, though I know it's not always realistic to push for that immediately. The liability protection from an LLC is real though - one equipment damage claim or injury lawsuit could wipe out years of earnings. Even if you start simple with expense tracking and quarterly payments, definitely research the LLC formation process for your state.

Has anyone else had issues with tax software correctly calculating Part III of Form 1116? I use TurboTax and it seems to be miscalculating my credit limitation.

I went through the exact same Form 1116 confusion when I moved to the UK! The instructions are absolutely terrible for newcomers to international tax filing. Just to reinforce what others have said - yes, both UK income tax AND National Insurance contributions qualify for the Foreign Tax Credit. This is explicitly stated in IRS Publication 514. Don't let anyone tell you otherwise. For Part II, think of it this way: Part I is about your income, Part II is about the taxes you paid on that income. So your UK salary goes in Part I, and the actual tax amounts withheld (both income tax and NI) go in Part II with the dates they were withheld. One thing I wish someone had told me earlier - keep really good records of your UK payslips and P60 because you'll need the exact amounts and dates for Form 1116. Also, the HMRC website has a great tool that shows you exactly how much income tax vs National Insurance you paid if you need to break it down. The exchange rate thing is annoying but manageable. I used the IRS annual average rates for simplicity since I had regular monthly withholding. If you had any lump sum payments or bonuses, you'd want to use the specific date rate for those. Hang in there - it gets easier once you understand the structure! Next year when you qualify for Form 2555, you'll have more options to optimize your tax situation.

As someone who's dealt with medical equipment deductions before, I'd recommend getting really specific documentation from your doctor. The IRS likes to see detailed medical justification for expenses like this. Have your doctor write a letter that specifically states: 1. Your sleep apnea diagnosis and severity 2. The medical necessity of uninterrupted CPAP use 3. How power outages directly impact your health/treatment 4. Why a generator is medically necessary for your condition Also keep detailed records of power outages in your area - utility company outage reports, dates/times, duration. This helps establish the pattern of need. For the percentage calculation, consider tracking your generator usage during outages - how much is for medical equipment vs general household use. If you have refrigerated medications too, that strengthens the medical percentage. One thing to watch out for: make sure you're not double-dipping on deductions. If you claim part of the generator cost as medical, you can't also claim it as a home improvement or energy credit. The IRS is pretty strict about that.

I've been through a similar situation with medical equipment deductions, and the key is really in the details. For documentation, there's no official IRS form for doctor letters, but I found success when my physician included specific medical terminology and referenced the relevant tax code (Publication 502). Have your doctor mention that the equipment is "medically necessary" and cite how power interruptions could "exacerbate your medical condition" or "interfere with prescribed treatment." For utility outages, official documentation is definitely better - most utility companies will provide historical outage reports if you request them. Screenshots can work as supporting evidence, but having an official report from your utility company showing the frequency and duration of outages in your area gives you much stronger documentation if you're ever audited. One more tip: consider getting quotes for a CPAP-specific battery backup system as well. Having documentation that shows you explored the less expensive medical-only option but it wasn't sufficient for your needs (like with extended outages or multiple medical requirements) can help justify why the generator was necessary. The IRS likes to see that you chose the most reasonable medical solution for your situation.