Anyone know if this applies the same way for Schedule SE 2023? My husband and I are in similar situation but neither of us hit the $160,200 limit individually although together we go over. Am I understanding right that we'll both owe the full 12.4% SS tax on our side hustle income? That seems so unfair when couples who have one high earner wouldn't pay this!

I've been a tax preparer for 15 years and this is one of the most common misconceptions I see with married couples who both have self-employment income. The key thing to remember is that Schedule SE is NOT affected by your filing status - it's always calculated individually. Even though you file a joint return, Social Security benefits are earned individually, so the taxes that fund them are also calculated individually. Each spouse needs their own Schedule SE, and line 8A should only include that person's individual W-2 wages, never the combined amount. One tip: if you're doing this yourself, make sure you're using the correct wage base limit for the tax year you're filing. It increases almost every year due to inflation adjustments. Also, don't forget to claim the deduction for the employer portion of self-employment tax on your joint return - that's one place where filing jointly actually helps you!

Has anyone had issues with their state taxes and solar credits? I'm in California and have heard there are additional state incentives, but I'm not sure how they interact with the federal credit.

One thing that might help clarify the tax liability vs refund confusion - think of it this way: your tax liability is like the total bill for dinner at a restaurant. Throughout the year, you're making payments toward that bill through payroll withholding. If you overpay (like leaving a $50 tip on a $30 meal), you get change back - that's your refund. But the solar credit applies to the actual meal cost (your tax liability), not just the change you get back. So if your total tax liability is $4,000 and you paid $5,500 through withholding, you'd normally get a $1,500 refund. With an $8,400 solar credit, it would wipe out your entire $4,000 liability, you'd get back all $5,500 you paid in, and you'd carry forward $4,400 to next year's taxes. The key insight is that adjusting your withholding doesn't change your liability - it just changes the timing of when you pay it.

Check if you qualify as a statutory employee - could be middle ground solution. Some workers can be treated as 1099 contractors but don't have to pay full self employment tax. Worth looking into.

I went through almost the exact same situation a couple years ago with a temp agency that should have classified me as W-2 but sent a 1099-NEC instead. Here's what I learned: The key test is who had control over your work. Since your boss told you when to work, likely provided tools/equipment, and you worked exclusively for them during that period, you were definitely misclassified as an independent contractor. I'd recommend starting with a conversation with your former employer before filing any IRS forms. Explain that you believe you were misclassified and ask if they'd be willing to issue a corrected W-2. Many small business owners genuinely don't understand the classification rules and might fix it voluntarily to avoid potential IRS scrutiny. If they refuse, then go the Form SS-8 and Form 8919 route that others mentioned. The SS-8 gets you an official determination, and the 8919 lets you pay only the employee portion of Social Security/Medicare taxes instead of the full self-employment tax. One month of work probably isn't a huge tax difference, but it's the principle that matters. Don't let employers shift their tax burden onto workers - that's exactly why these classification rules exist.

One thing nobody mentioned yet - if you made only $2400, look into the Qualified Business Income deduction (Form 8995). It might let you deduct up to 20% of your business income! Definitely worth checking out for small sole proprietors. Also, if you worked from home for your business, don't forget about the home office deduction. You can either do the simplified method ($5 per square foot up to 300 sq ft) or actual expenses method. Just make sure the space is used regularly and exclusively for business.

Great question about the QBI deduction! The phase-out thresholds are pretty high - for 2024, the QBI deduction starts phasing out at $191,950 for single filers and $383,900 for married filing jointly. So with your $2,400 in business income, you're well below that threshold and should be able to claim the full 20% deduction. Just make sure your business qualifies - most sole proprietorships do, but there are some exclusions for certain service businesses at higher income levels (which again, you don't need to worry about at your income level). Form 8995 is pretty straightforward for simple cases like yours. This deduction alone could save you around $480 in taxable income, which is a nice chunk of change when you're just starting out!

My sister works for the IRS (not in collections) and she always says most OICs fail because people don't give COMPLETE financial information. They leave stuff out thinking the IRS wont notice. But they have ways to verify your bank accounts, property, etc. If they catch you hiding things, your offer will be rejected immediately. Also make sure you keep filing and paying current taxes while your OIC is pending! That's another common reason they get rejected.

I went through the OIC process about 3 years ago with $89k in tax debt and successfully settled for $15k. The key things that helped me were: 1. Being completely transparent about my financial situation - I included EVERYTHING, even small bank accounts with minimal balances 2. Working with the Taxpayer Advocate Service (free!) when I got stuck on paperwork 3. Including detailed documentation of my expenses and why I couldn't pay the full amount 4. Being patient - the whole process took 11 months but was worth it One thing I wish I'd known earlier: if you qualify for the low-income certification, you don't have to pay the application fee or the initial payment with your offer. This saved me $205 plus the 20% down payment I would have had to include. Also, during the review process, make sure you respond to ANY requests for additional information immediately. They give you specific deadlines and missing them will kill your application. Given your situation with no assets and limited income, you actually have a decent shot at getting approved. The IRS knows they can't get blood from a stone. Just make sure your offer reflects what you can realistically pay based on their calculation methods.