Just a heads up - make sure you're also considering any potential late filing penalties for these prior year 1099 NECs. The penalty ranges from $50 to $280 per form depending on how late they are and whether the IRS considers it intentional disregard. If you have a reasonable cause for filing late, include a statement explaining the circumstances. The IRS can waive penalties if you can show reasonable cause for not filing on time.

For the 1099 NEC forms, you can also check with local office supply stores like Staples or OfficeDepot - they sometimes carry prior year tax forms in stock, especially during tax season. I found 2021 forms at my local Staples last year when I was in a similar situation. Regarding penalties, if you're filing these 1099s now for 2021 and 2022, you're definitely looking at late filing penalties. However, since your contractor already reported the income on their tax returns, this works in your favor for penalty abatement. The IRS is more lenient when the income was properly reported by the recipient even if the 1099 was filed late. When you submit the forms, include a letter explaining that this is your first time filing 1099s as a small business owner, you've been working to get compliant, and the recipients have already properly reported the income. This reasonable cause explanation can help reduce or eliminate penalties. Also, double-check that you actually need to issue 1099 NECs - you only need them if you paid $600 or more to non-corporate contractors during the tax year. If your contractor was incorporated, you generally don't need to issue a 1099 NEC at all.

Stupid question maybe but do the rules change if you have a multi-member LLC instead of single-member? My partner and I just formed one and now I'm confused about quarterly payments.

This is such a common source of confusion for new LLC owners! I went through the same thing when I started my consulting business. The key thing to remember is that even though you got an EIN (which was smart for banking and other business purposes), your single-member LLC is what the IRS calls a "disregarded entity" by default. This means for tax purposes, it's like the LLC doesn't exist - all the income and expenses flow through to your personal tax return on Schedule C. So when you make quarterly estimated payments, you're essentially making payments toward your personal income tax liability (including self-employment tax), which is why you use your SSN on Form 1040-ES. Your EIN is still valuable though! You'll need it for business banking, if you ever pay contractors over $600 (for 1099 reporting), and potentially for state tax filings depending on where you're located. Just remember: EIN for business stuff, SSN for your actual tax payments to the IRS.

As a tax preparer who's seen this exact scenario play out many times, I want to emphasize something that's been touched on but deserves more attention: the IRS has gotten much more sophisticated at detecting these patterns through automated systems. What you're describing - transferring assets just under the Kiddie Tax threshold to multiple children followed by quick sales - is essentially a textbook example of what their algorithms flag for review. Even if everything is technically legal, you're setting yourself up for scrutiny that's just not worth the minimal tax savings. I've had three clients in the past two years who tried variations of this strategy. All three ended up spending more on professional fees during their audits than they saved in taxes. The IRS agents specifically mentioned that custodial account activity is one of their focus areas right now. If you're really looking to reduce your tax burden while helping your kids, consider more straightforward approaches: 529 plans (as mentioned), direct educational expense payments (which don't count against gift limits), or even just holding the investments until you qualify for long-term capital gains rates. Sometimes the most boring strategy is also the smartest one.

New member here, but this discussion has been incredibly valuable as I was considering a very similar strategy for my two kids. The warning about IRS algorithms specifically flagging custodial account patterns is exactly what I needed to hear. I'm curious about one thing that hasn't been fully addressed - for those who mentioned 529 plans as the better alternative, are there any downsides to be aware of? I know the money has to be used for qualified education expenses, but what happens if my kids decide not to go to college or get full scholarships? Also, @CosmicCruiser mentioned that direct educational expense payments don't count against gift limits - could you elaborate on how that works? Does that mean I could pay tuition directly to the school without it counting against the annual gift tax exclusion? Thanks for saving me from what would have clearly been a mistake. Sometimes the "too good to be true" strategies really are just that.

I went through something similar last year with about $8k in back taxes from some 1099 work. After doing a ton of research, I ended up handling it myself and it was way easier than I expected. The key thing is to not panic - the IRS actually wants to work with you if you're proactive. I called their main number early in the morning (around 7 AM when they opened) and got through in about 45 minutes. The agent was actually really helpful and walked me through setting up a 60-month payment plan. One thing I learned is that you can request "first-time penalty abatement" if you've been compliant in previous years. This can wipe out a big chunk of the penalties (not the actual tax owed, but the penalty fees). For me, this saved about $1,200. My advice: try the DIY route first. If you get stuck or overwhelmed, then consider getting help. But for a straightforward situation like yours, you can probably handle it yourself and save thousands in fees.

I went through a very similar situation about 18 months ago - owed around $14k from some consulting work where I messed up the quarterly payments. The stress and panic you're feeling is totally normal, but honestly the IRS is much more reasonable than those scary letters make it seem. I initially got quotes from three different tax resolution companies and they ranged from $3,500 to $6,200 just for their fees. One place literally told me they could "probably" get my debt reduced to $2,000 but couldn't guarantee anything. When I pressed them on specifics, it became clear they were just going to submit the same forms I could do myself. Instead, I ended up going the DIY route and it saved me thousands. Set up a 72-month payment plan directly through the IRS website for about $205/month. The whole process took maybe 30 minutes online, and I didn't have to deal with any pushy salespeople or worry about getting scammed. The reality is that for most people with straightforward tax debt like yours, those expensive services just aren't worth it. The IRS has gotten much better about working with taxpayers who are proactive about resolving their debt. Save your money and try handling it yourself first!

I see you have both an 810 freeze and 570 pending action code - that's a double hold situation that unfortunately means your refund is stuck until the IRS completes their review. The good news is your credits are already calculated and scheduled to post on 4/16-4/17, so once the review clears, your refund should process quickly. With the EIC and those credit amounts, the IRS is likely doing income verification. Keep checking your transcript weekly for a 571 code (which releases the 570) or any updates to the 810 freeze. The wait is frustrating but your refund isn't lost, just delayed while they verify everything matches up.

I've been through this exact situation before! The combination of codes 810 and 570 means your return is in what we call "manual review status." The IRS flagged it for additional verification - likely because of the substantial EIC and credits totaling over $14,000. Here's what helped me during my wait: 1) Check your transcript every Friday morning when they update, 2) Don't call the IRS unless it's been over 120 days from your 570 date (they'll just tell you to wait), and 3) Make sure all your documents are ready in case they send a correspondence requesting verification. The timeline is typically 6-16 weeks from the 570 date for EIC reviews. Your cycle code suggests you should see movement by late April/early May. I know the wait is brutal, but hang in there - once it clears, you'll get your full refund amount!