What about payments made through credit cards or PayPal? I heard those don't require 1099s even if they're over $600?

You're correct! If you paid contractors through third-party payment processors like PayPal, Venmo, credit card processors, or other payment networks, you generally don't need to issue 1099-NECs. The payment processor is responsible for issuing 1099-Ks to the contractors if they meet certain thresholds. However, if you paid contractors by check, cash, wire transfer, or direct bank transfer, then you DO need to issue 1099-NECs for amounts $600 and above. This is why it's helpful to keep track of your payment methods when working with contractors throughout the year.

For California specifically, you're in luck - the state doesn't require separate 1099 filing! California follows federal requirements, so once you file your 1099-NECs with the IRS, you're covered for state purposes too. However, you're smart to double-check because some states like Massachusetts, Vermont, and a few others do have their own 1099 filing requirements with separate deadlines and forms. The easiest way to verify is to check your state's Department of Revenue or Franchise Tax Board website (for CA, that's the Franchise Tax Board). Most of the online 1099 services mentioned earlier will also tell you during setup if your state has additional requirements, which is another reason they can be worth the cost even for just a few forms.

For California specifically, you'll want to check the California Franchise Tax Board (FTB) website. California generally follows federal 1099 requirements, but they do have their own filing deadlines and procedures. The easiest way is to search "California 1099 filing requirements" on the FTB site, or look for their "Information Returns" section. Most states have a dedicated page for business tax filing requirements that will spell out if they require separate state filings for 1099s. You can also call your state's business tax helpline - they're usually much easier to reach than the IRS and can give you state-specific guidance. California's FTB has pretty good customer service compared to some other states.

That's not how it works. The taxable event is when you win the bet, not when you withdraw the money. The IRS considers each wager a separate taxable transaction. Delaying withdrawal doesn't change your obligation to report the winnings.

I tried H&R Block last year with a similar tax situation (W-2, dividends, some stock sales) and honestly felt it wasn't worth it. The person who helped me seemed to be just following the same software prompts I would have followed myself. And they missed a form for my HSA that I had to point out to them! Cost me $180 for basically what I could've done myself for $40 with online software.

For tax planning resources, I'd recommend starting with the IRS's own Publication 590 for retirement account strategies and Publication 969 for HSA rules. The Bogleheads wiki (bogleheads.org/wiki) has excellent plain-English explanations of tax-advantaged accounts and strategies for different income levels. For your situation specifically, definitely look into whether you should increase your 401k contribution percentage with your raise - you might be able to stay in a lower tax bracket or at least reduce your taxable income significantly. Also worth checking if your employer offers after-tax 401k contributions (for mega backdoor Roth) now that you have more income to work with. The White Coat Investor blog also has good content on tax strategies for higher (but not ultra-high) earners, even though it's aimed at doctors. Most of the principles apply to anyone who's moved up in income brackets.

For tax planning resources, I'd recommend starting with the IRS's own publications - they're free and surprisingly readable. Publication 590-A and 590-B cover IRAs and retirement planning, which is probably most relevant for your situation. The Bogleheads wiki is also excellent for investment and tax strategy basics. For your income level, the main things to focus on are: maxing your 401k (especially if you have employer matching), fully funding your HSA if you have one, and understanding the income limits for Roth IRA contributions. Once you hit certain income thresholds, you might need to look into backdoor Roth strategies, but that's something you can learn about gradually. If you want something more structured, consider a one-time consultation with a fee-only financial planner who can review your overall strategy. They're different from CPAs - they focus on planning rather than just tax preparation, and many charge reasonable hourly rates for advice.

I'm somewhat concerned about this as well. My transcript has shown a similar pattern, with the TC 150 posted but no refund date. It seems, perhaps, that our returns are being processed through the normal verification channels, but the final refund authorization is being withheld until after the PATH restrictions lift. Would appreciate if someone with more expertise could weigh in on this specific scenario.

@Marcus Marsh @Hailey O Leary'TC 150 means your return has been processed and accepted by the IRS system - this is actually great news! It shows you ve'passed initial verification and your refund amount has been approved. The missing DDD Direct (Deposit Date is) completely normal for PATH-affected returns right now. Your return is essentially complete "but" waiting in queue for the February 15th release. I ve'seen this exact pattern the last three years - TC 150 posts first, then DDD appears closer to or after the PATH lift date. You re'likely in that early processing batch everyone s'talking about!

Thanks for sharing your experience! That's encouraging to hear. Did you need to provide any specific documentation with your 941-X forms, or did you just keep it on hand in case of an audit? And how complicated was it to separate out the PPP wages from ERC-eligible wages?

I didn't have to submit documentation with the 941-X forms, but I created a complete package that I keep ready in case of audit. I included quarterly financial statements showing the revenue drop, payroll records, and a spreadsheet tracking exactly which employee wages were claimed for PPP vs. ERC. Separating PPP wages from ERC-eligible wages was definitely the most complicated part. I created a spreadsheet showing each employee, their wages during the covered period, how much was allocated to PPP forgiveness, and then the remaining amount eligible for ERC. The key is you can't use the same wages for both programs, so I had to be very methodical about tracking which dollars went where.

What exactly makes a claim "improper"? My business had a 30% revenue drop in 2020 Q3 compared to 2019 Q3, and we kept all employees on payroll. Isn't that enough to qualify?

Revenue decline alone isn't always sufficient - you need to meet very specific criteria. The IRS considers claims improper when businesses claim ERC without actually qualifying under the strict rules. Common issues include: claiming wages for employees who weren't actually working during shutdown periods, misunderstanding what constitutes a "government order" that suspended operations, incorrectly calculating the revenue decline test (it has to be compared to the same quarter in the prior year), and double-dipping with PPP wages. Your 30% decline in Q3 2020 vs Q3 2019 would potentially qualify you under the revenue test, but you'd need to ensure all your wage calculations and employee eligibility are correct. The IRS is particularly scrutinizing claims where businesses claimed ERC for periods when they weren't actually impacted by COVID restrictions or didn't meet the technical requirements.