Just a heads up that Venmo payments over $600 are now being reported to the IRS anyway through 1099-K forms. So even if your employer doesn't send a 1099-NEC, Venmo might send you a 1099-K for all those payments. Either way the IRS will know about the income.

Just to add some practical advice - make sure you're keeping detailed records of ALL your contractor expenses too! Since you're getting paid through Venmo and working as an independent contractor, you can deduct legitimate business expenses on Schedule C. Things like your home office space, internet bills, computer equipment, software subscriptions, travel for work, and even a portion of your phone bill can potentially be deducted. This can significantly reduce your taxable income and the self-employment taxes you'll owe. Also, don't forget you'll need to pay quarterly estimated taxes if you expect to owe $1,000 or more for the year. With $18,500 in contractor income, you'll likely owe both income tax and self-employment tax (Social Security and Medicare). The IRS expects payments throughout the year, not just at filing time. Consider setting aside 25-30% of each payment you receive to cover your tax obligations. It's better to overpay slightly than get hit with underpayment penalties!

The IRS website has a great resource for this! Go to IRS.gov and search for "Student Loan Interest Deduction" - they maintain a table with current and previous year phase-out ranges. You can also find all the inflation-adjusted tax parameters in IRS Revenue Procedure publications, which are released annually. For example, Rev. Proc. 2023-34 has all the 2024 numbers, and Rev. Proc. 2024-40 has the 2025 figures. Pro tip: bookmark the IRS "Tax Benefits for Education" page (Publication 970) as it gets updated each year with all the current thresholds for student loan interest deduction, education credits, and other education-related tax benefits. Much more reliable than random tax websites that might not be updated promptly.

This is a great example of why it's so important to double-check which tax year's rules apply to any given question! I've seen this trip up so many people on exams and in real practice. One thing that might help for future reference: when you're doing phase-out calculations, always remember the formula is applied to the MAXIMUM allowable deduction amount, not the actual amount paid. So for student loan interest, you're always starting with the lesser of $2,500 or actual interest paid, then applying the phase-out reduction to that base amount. The IRS is pretty consistent with this approach across different deductions and credits - they phase out the benefit amount, not the underlying expense. This same logic applies to education credits, retirement contribution deductions, and other income-sensitive tax benefits. Glad you got the job despite the test confusion! Sometimes these exam questions can be poorly worded or use outdated figures, which makes them more about test-taking strategy than actual tax knowledge.

For everyone saying to track every hour/date: I just set aside one day a week to update my records. Friday afternoons, I enter all cash payments and expenses from the week. Takes maybe 15 minutes but saves so much stress at tax time. Been doing this for 6 years as a handyman getting mostly cash payments. Never had any issues with the IRS.

This is really helpful info everyone! I had no idea I needed to track so much detail for cash payments. @Carmen Ruiz your weekly routine sounds perfect - I think I'll try something similar. One more question though - if I'm doing multiple small jobs for the same client throughout the year, do I need to record each individual payment separately or can I just track monthly totals per client? Like if someone pays me $50 every week for yard work, is it okay to just record "$200 - yard work for Client A - January" or does the IRS want to see each individual $50 payment listed?

Great thread! Just to add one more resource - if you're still feeling uncertain about the filing requirements after using tax software, the IRS has a really helpful Interactive Tax Assistant tool on their website (irs.gov/help/ita). You can walk through a series of questions about your daughter's specific situation and it will give you a definitive answer about whether filing is required. I used it last year when my nephew had a similar situation with both W-2 income and investment sales. The tool is free, official, and takes into account all the different thresholds and rules that apply to dependents. It's particularly useful because it considers the interaction between earned income, unearned income, and gross proceeds from sales. Since you mentioned this is her first year investing, you might also want to keep good records of all her transactions beyond just what's on the 1099-B. If she continues investing, having detailed records of purchase dates, amounts, and any reinvested dividends will be invaluable for future tax years. Good luck with the filing!

This is such a valuable discussion! I'm dealing with a similar situation with my 16-year-old who started investing with birthday money. One thing I learned the hard way is that even though the gross proceeds threshold triggers the filing requirement, you also need to be careful about how the cost basis is reported on the 1099-B. Some brokerages don't track cost basis for stocks purchased before certain dates, or they might not have complete information if the stocks were transferred from another account. If the cost basis shows as "not reported to IRS" or is blank on the 1099-B, you'll need to provide that information on the tax return yourself. I'd recommend double-checking that the $2,800 cost basis on your daughter's 1099-B matches your records of what was actually paid for the stocks. If there are any discrepancies, you'll want to have documentation ready to support the correct cost basis when filing. The IRS will definitely notice if the reported gain doesn't match what they expect based on the 1099-B information they receive.

Has anyone here actually calculated the exact difference between donating directly to charity vs using a DAF? I'm trying to figure out if the extra complexity is worth it for my situation.

One thing to keep in mind with your specific situation is the timing of when you execute this strategy. Since you're planning to donate $130k worth of appreciated stock to a DAF, you'll want to make sure you have enough AGI to use the full deduction in the current tax year. With your combined income of $650k, you should be able to deduct up to 30% of AGI for appreciated stock donations to a DAF, which would be around $195k - so you're well within the limits for the $130k donation. However, I'd recommend getting the DAF set up and making the stock donation BEFORE you sell the other $130k portion. This way you can see exactly how the deduction impacts your tax liability before triggering the capital gains on the sale. Also worth noting that different brokerages have different processes for transferring appreciated securities to DAFs - some are more streamlined than others. Fidelity, Schwab, and Vanguard all make it relatively easy if you're already their customer, but it can take a few days to process the transfer. The strategy definitely works, but the exact tax savings will depend on your state taxes and whether you're subject to the 3.8% net investment income tax on the capital gains portion.