One thing nobody's mentioned - your sister might qualify for the Qualified Business Income deduction (Section 199A) which could reduce her taxable income by up to 20% of her net business profit. This is available to most self-employed people and small business owners. So while she does need to pay self-employment tax on her 1099-NEC income (by filing Schedule C), this deduction could help offset some of the income tax on that amount. It's automatically calculated in most tax software when you report self-employment income correctly. Don't try to game the system by filing incorrectly - instead, take advantage of all the legitimate deductions and credits available to self-employed individuals!

I just went through this exact situation with my son who does YouTube sponsorships! The confusion about "non-employee compensation" is so common - I thought the same thing initially. What really helped us was understanding that the 1099-NEC form is basically the IRS saying "this person paid you as a contractor, not an employee." It doesn't mean you avoid self-employment taxes - it means you're running a business and need to report it properly. For your sister's situation, she's essentially running a personal brand/marketing business. All that 1099-NEC income needs to go on Schedule C, but the good news is she can deduct a lot of business expenses that might not be obvious: - Equipment for creating sponsored content (camera, lighting, tripods) - Portion of phone/internet bills used for business - Travel to sponsored events or photo shoots - Athletic gear required specifically for sponsorship activities - Professional photography/videography services - Marketing materials or business cards - Even a portion of her training expenses if they're tied to maintaining her sponsored athlete status The self-employment tax hurts at first, but properly tracking these expenses can really reduce her taxable income. Plus, as someone mentioned, the QBI deduction can save up to 20% on the income tax portion. Better to file correctly now than deal with IRS notices later!

One more thing nobody mentioned - make sure both W-2s have the correct "retirement plan" box checked if you contribute to a 401k or similar. I had a mid-year payroll switch and one W-2 had it checked but the other didn't, which messed up my IRA contribution deduction eligibility.

This is a really important point that often gets overlooked! I went through a similar mid-year payroll switch situation and learned the hard way that you need to verify ALL the boxes and year-to-date totals, not just the basic wage information. In addition to the retirement plan box and Social Security wages that others mentioned, also double-check: - State disability insurance (SDI) withholding limits if you're in CA, NY, or other states that have them - Any HSA contributions - make sure the annual limits aren't exceeded across both W-2s - Dependent care assistance program (DCAP) benefits if your company offers them The payroll providers often don't communicate these year-to-date limits to each other, so you could end up with over-withholding or under-withholding that creates tax complications later. I had to file amended returns because my HSA contributions were incorrectly reported as exceeding the annual limit when they were actually fine - it was just split across two W-2s.

For anyone doing short-term trading on apps like CashApp - what tax software are y'all using? I tried TurboTax last year but it was a nightmare trying to enter all my trades manually.

Just wanted to add something important that I learned after my first year of active trading - make sure you understand the difference between "trader" and "investor" status with the IRS. Most people doing casual day trading like you described are considered investors, which means your trading losses are capital losses (limited to $3,000 deduction per year against ordinary income). However, if you were doing this as a business (trading frequently, substantial time commitment, seeking short-term profits), you might qualify for trader status, which has different tax implications. With your $46k in trades on a $52k salary, it's probably worth understanding this distinction. Also, since you mentioned some same-day flips - just be aware that day trading can sometimes trigger pattern day trader rules with brokers (though that's more about account requirements than taxes). The tax treatment is the same whether you hold for minutes or weeks, as long as it's under a year it's all short-term capital gains/losses. Your $790 loss will definitely help reduce your tax bill, not increase it!

Does anyone know what software is best for tracking inventory this way? We've been using QuickBooks but it seems designed for the traditional COGS method. Now I'm wondering if we need something different if we switch to expensing inventory at purchase.

This is such helpful information! I've been struggling with the same decision for my small electronics repair shop. We stock replacement parts and I've always done the traditional COGS method, but it's been a real headache tracking everything. One thing I'm curious about - if we make this election to expense inventory when purchased, does it affect our ability to use Section 199A (the 20% small business deduction)? I know that deduction is based on qualified business income, and I'm wondering if changing how we account for inventory impacts that calculation at all. Also, has anyone dealt with sales tax implications? In my state, we pay sales tax on inventory purchases, and I want to make sure switching to this method doesn't create any issues with how we handle sales tax reporting or credits.

Another money-saving option for your state taxes: check if your state has a free filing option directly through their tax department website. Many states offer free filing portals that aren't advertised as much as the paid services. For example, I live in California and was able to file for free using CalFile directly through the state franchise tax board. I had a similar situation where FreeTaxUSA wanted to charge for state filing after I did federal for free.

Pro tip: If you're filing back taxes just for FAFSA purposes, you can also request your tax transcript directly from the IRS after filing your federal return. This is free and often processes faster than waiting for your full return to be processed. The FAFSA verification process will accept tax transcripts if they need to verify your information.