One more thing to consider - the deadline for filing 1099s with the IRS is January 31, which is earlier than it used to be years ago. If this is your first time filing, don't get caught by surprise! Also, make sure you're collecting W-9 forms from vendors BEFORE you pay them, not scrambling to get them in January. I learned this the hard way when several of my vendors were impossible to reach when I needed their tax info.

This is such a common confusion for new S Corp owners! Your accountant is absolutely right about the 1099 requirement. I went through the exact same thing my first year and was shocked to learn about all the paperwork involved. One tip that really helped me: create a vendor tracking spreadsheet at the beginning of each tax year. Include columns for vendor name, business structure (sole prop, LLC, corp), total payments, and whether a W-9 is needed. Update it quarterly so you're not scrambling in January. Also, don't forget that the penalties for not filing required 1099s can be pretty steep - up to $280 per form if you're really late. The IRS has been cracking down on this more in recent years, so it's definitely worth getting compliant even if other people in your industry aren't doing it properly. Your colleague who says she's never had to issue them is probably either working with mostly incorporated vendors (who don't need 1099s) or simply not complying with the requirement. Better to be safe and follow your accountant's advice!

This is my first time claiming these credits and tbh the waiting is stressing me out. Bills don't wait for the IRS to get their act together smh

Filed 1/26 with both EITC and CTC here. Same situation - TurboTax gave me the March 3rd estimate. I've been checking WMR obsessively but it just says "processing" still. At least we're all in this together! The PATH Act delay is so frustrating when you're counting on that money.

dont trust those WMR dates, mine changed like 3 times last year lmaooo

Filed 1/12 with EIC and got the same acceptance date as you! From what I've researched, the PATH Act delay is real but some people do get their refunds in the Feb 20-25 range if there are no issues with their return. Keep checking your transcripts on the IRS website - that's usually more accurate than WMR for timing updates.

This is such a common confusion point! I went through the exact same thing last year with a similar situation - 1099-K showing around $19k but net profit of only $320 after legitimate business expenses. Here's what I learned after researching extensively and talking to a tax professional: Even though you're under the $400 self-employment tax threshold, you should still file a return with Schedule C to report the income and expenses. The key reason is that the IRS already knows about that gross income from PayPal's 1099-K reporting. If you don't file, their automated matching system will likely flag the "missing" income and you could get a CP2000 notice asking you to explain the discrepancy. It's much easier to file now showing how your expenses reduced that gross amount to under $400 than to deal with notices later. You won't owe any self-employment tax since you're under $400 net profit, and if this was your only income and you're under the standard deduction, you probably won't owe any income tax either. But filing creates a clear paper trail that prevents future headaches with the IRS matching system.

I'm dealing with this exact same situation right now! Got a 1099-K from Stripe for $16,800 in gross receipts from my photography side business, but after deducting all my legitimate expenses (equipment, software subscriptions, travel costs, etc.), my net profit was only around $290. Reading through all these responses has been super helpful - I was initially planning to not file since I'm under the $400 SE threshold, but the point about the IRS automated matching system makes total sense. They already know about that $16,800 from Stripe's reporting, so not filing could definitely trigger a notice later. I think I'm going to go ahead and file with Schedule C to show how my expenses brought that gross amount down below $400. Better to be safe and create that paper trail now rather than deal with explaining it to the IRS later. Thanks everyone for sharing your experiences - this community is incredibly helpful for navigating these confusing tax situations!

Don't forget that state taxes are deductible from federal! So while you're paying 5.75% to Virginia, you get to deduct that from your federal taxable income (up to $10,000 combined with property taxes). So it's not quite as simple as adding all three percentages.

Your calculation isn't wrong, but you're looking at worst-case scenario numbers. As a fellow freelancer, I was in the same panic mode when I started. Here's what helped me understand the real picture: 1. The 24% federal rate is marginal, not effective. You only pay 24% on income above $95,550 (for 2025). Everything below that is taxed at 10%, 12%, and 22%. 2. You can deduct half your self-employment tax from your federal taxable income, which reduces that 24% burden. 3. The QBI deduction can reduce your taxable income by up to 20% if you qualify (most freelancers do). 4. Business expenses are huge - software, equipment, home office, professional development, business insurance, etc. These come off the top before any tax calculations. When I actually ran my numbers with realistic deductions, my effective tax rate was around 28-30%, not the 45% I initially calculated. Still high compared to some countries, but not the nightmare I thought it would be. Track every legitimate business expense - it makes a massive difference!