According to Internal Revenue Manual 5.19.17.2, "The offset of refunds to pay tax liabilities is not prohibited while a taxpayer is in CNC status." I went through this myself. I was placed in CNC status in 2022, filed my return in February 2023, and my entire $2,800 refund was applied to my outstanding tax debt. The IRS considers refund offsets as passive collection actions that are separate from the active collection actions prohibited by CNC status. I understand how frustrating this can be when you're already in financial hardship.

I'm currently going through this exact situation and can confirm what others have said - CNC status won't protect your refund from offset. I was placed in CNC status in September 2023 due to unemployment, but when I filed my 2022 return last April, they still took my entire $1,847 refund. The frustrating part is that the CNC determination letter specifically states they won't pursue collection activities, but apparently refund offsets don't count as "active" collections. I called the Taxpayer Advocate Service to see if there were any options, and they explained that the offset happens automatically through the Treasury Offset Program before the IRS even processes your return. My advice would be to adjust your withholdings going forward so you owe a small amount instead of getting a refund - that way there's nothing for them to take.

Has anyone used both the standard deduction and itemized for different tax years? I'm trying to figure out if it's worth keeping track of all my potential deductions or if the standard deduction is just gonna be higher anyway. I make about $75k.

Coming from someone who just went through this exact same shock last year - you're definitely not alone in feeling overwhelmed by that first "real job" tax hit! I remember staring at my paystub thinking there had to be some mistake. One thing that helped me understand it better was breaking down exactly where that 30% is going. It's not all "income tax" - you've got federal income tax (probably around 12-22% marginal rate at your salary), Social Security (6.2%), Medicare (1.45%), state tax (varies wildly by state), and potentially other deductions like health insurance or retirement contributions. The good news is there are definitely ways to reduce your taxable income legally. I started contributing to my company's 401(k) last year and it made a noticeable difference - not just for retirement but for lowering my current tax burden. Even contributing just enough to get any company match is essentially free money. Also, don't forget about things like student loan interest deduction if you have loans, or setting up an HSA if your health plan qualifies. These aren't huge game-changers but every bit helps when you're starting out your career. The frustrating part is that unlike other countries where you see direct benefits like healthcare or education, in the US it's harder to connect what you're paying to what you're getting. But hang in there - as your income grows, you'll have more options for tax planning!

Your cousin might want to consider proper legal structuring here. Having some properties in personal name and others in an LLC is creating confusion. He might benefit from putting ALL properties into LLCs (maybe separate LLCs for liability purposes) but then having all of those LLCs owned by a holding company that could elect S-Corp taxation. This way, he gets liability protection for all properties, potential self-employment tax savings on the management portion of his activities, and clearer separation between his rental business and handyman service business.

There's another important consideration here that I haven't seen mentioned - the passive activity loss rules. Since your cousin has a handyman business (which generates active income), he needs to be careful about how rental losses interact with his other income. If he's actively managing the rental properties (collecting rent, finding tenants, making management decisions), he might qualify for the $25,000 rental loss deduction against his handyman income, but this phases out at higher income levels. However, if he's paying his handyman business for work on the rentals, this could actually reduce his rental losses and affect this calculation. Also, regarding the LLC properties on Schedule C - this is definitely incorrect as others have mentioned. LLCs are typically disregarded entities for tax purposes unless they elect corporate taxation. The rental income should still go on Schedule E regardless of the LLC structure. One more thing to consider: if he's serious about building the handyman business, he should consider whether having it work primarily on his own properties might hurt his ability to claim it's a legitimate business activity rather than just a hobby or tax avoidance scheme. The IRS looks at factors like profit motive, time spent, expertise, and success in making profits when determining if something is a business.

Don't forget that even if your clients don't send you 1099-NECs (which happens a lot with smaller clients who don't know the rules), you still need to report ALL your income! The IRS doesn't care if you got a form or not. I've been freelancing for 6 years and I just create my own tracking system. I have clients that pay through Venmo, PayPal, direct deposit, and even paper checks (yes, still). I record everything in a spreadsheet with the payment method noted. Then at tax time, I can easily see what should be on forms and what might not be.

I just went through this exact situation last year as a freelancer! Here's what I learned after making some mistakes: You definitely need to provide W-9s to ALL your clients who pay you $600+ per year - this includes Client A for their full $4,000. The payment method doesn't matter for the client's 1099-NEC reporting requirement. For the 1099-K situation with Wise: Yes, if your total transactions across ALL clients through Wise exceed $20,000 AND you have more than 200 transactions, Wise will issue you a 1099-K. But here's the key - you won't be double-taxed because you only report your actual income once on Schedule C. What saved me was keeping a detailed spreadsheet with columns for: Client Name, Payment Date, Amount, Payment Method, and any fees deducted. This way when I got my 1099-NECs from clients AND a 1099-K from my payment processor, I could easily reconcile everything and make sure I wasn't over-reporting. One tip: Don't wait until tax time to organize this! I update my spreadsheet weekly now, and it makes everything so much easier. The IRS cares about your total income, not how many different forms report pieces of it.

For clergy W-2s, make sure you're using tax software that correctly handles ministerial income. Some basic tax programs don't properly account for the dual-status of clergy (employee for income tax, self-employed for SE tax). I've found that TaxSlayer Professional and Drake handle these situations well. You'll want to enter the W-2 normally, then make an adjustment on Schedule 1 if the housing allowance was included in Box 1 (rare), and then make sure the housing allowance gets included on Schedule SE. The software should properly generate Schedule SE with the housing allowance included for self-employment tax calculation, while keeping it excluded from income tax calculations.

Don't forget about the Deason Rule if your clergy client has both ministerial income and housing allowance! This rule requires you to allocate expenses proportionally between taxable and tax-exempt income. For example, if 30% of the minister's income is tax-exempt housing allowance, then 30% of business expenses would not be deductible. It's a tricky calculation that many preparers miss, but the IRS definitely looks for it in clergy returns.