So I'd have to make tax payments four times a year instead of just filing once? How do I even figure out how much to pay if I don't know how much I'll make?

Yes, you make four payments throughout the year (usually April, June, September, and January). To figure out how much to pay, you can either pay 100% of last year's tax liability divided into four payments (safest method to avoid penalties), or estimate what you'll make this year and calculate your tax payments based on that. If your income varies, you can adjust each quarterly payment based on what you've earned so far. There's a form called 1040-ES that helps you calculate this. H&R Block can help set this up for you too - just make sure to ask them about estimated tax payments if you expect to receive more 1099 income this year.

The 1099-MISC doesn't use Box 7 for nonemployee compensation anymore since 2020. That's now reported on 1099-NEC. If they really got a 1099-MISC (not NEC), then it's probably Box 3 for other income, royalties in Box 2, or rents in Box 1.

Not OP but I used FreeTaxUSA for crypto last year. It doesn't connect directly to exchanges like some premium services, but you can either enter transactions manually or import a CSV file if your exchange allows exports in that format. If you have tons of transactions, you might want to use a crypto tax service like CoinTracker or Koinly first to generate the required tax forms, then enter the summary into FreeTaxUSA.

Do they save your info from year to year? That's the only thing keeping me with TurboTax right now - I don't want to re-enter everything from scratch next year.

Yes, they definitely save your information year to year! You can import your previous year's return which pulls in all your personal info, employment info, etc. They even keep track of things like depreciation schedules and capital loss carryovers. The transition is pretty seamless if you're switching from another service too - just have a PDF of last year's return handy and you can pull most of the important info from there.

I checked and I'm definitely showing a profit on Schedule C - about $24k after expenses. And I'm filing as head of household with two qualifying children (ages 5 and 8). All their info including SSNs is entered correctly. That's why I'm so puzzled about why TurboTax treats the income differently.

That's definitely strange then! With $24k profit on Schedule C filing as head of household with two young kids, you should absolutely qualify for both EITC and the Additional Child Tax Credit. Maybe try deleting that section completely and re-entering it from scratch? Sometimes TurboTax gets stuck with certain calculations. Another thing to check is if you've got any investment income. If you have more than $10,300 in investment income for 2024, that can disqualify you from EITC. Also double-check if you accidentally clicked something that indicates the income isn't subject to self-employment tax, which might mess up how TurboTax treats it for credit purposes.

Do you know if this applies to all tax software or just TurboTax? I'm using FreeTaxUSA and wondering if I'll have the same issue.

I had no idea about the Qualified Business Income deduction! Is that something I'd need to file additional forms for? I use TurboTax self-employed to file and I don't remember seeing that option last year.

Yes, you'll need Schedule C to report your business income and expenses, and then Form 8995 or 8995-A for the Qualified Business Income deduction specifically. TurboTax Self-Employed should walk you through this if you indicate you have self-employment income, but sometimes you need to really dig into the deductions section to make sure it's applied. Double-check that it's calculating this deduction for you - it should be up to 20% of your net business income depending on your total taxable income. It's definitely worth making sure you're getting this deduction since it can save you thousands!

That 60-30-10 rule is brilliant. I've been freelancing for 3 years and always scramble at tax time. Does that 30% usually cover your federal, state AND self-employment taxes? Or do you find you need more sometimes?

That's a really good point about deductions. Do I need to file a Schedule C for the contractor income? And is it worth looking into setting up an LLC or something like that for tax purposes?

Yes, you'll need to file Schedule C to report your business income and expenses as a self-employed person. This is where you'll list all those deductions I mentioned. Regarding an LLC, it probably isn't necessary just yet at your income level. An LLC by itself doesn't change how you're taxed - you'd still file Schedule C. It mainly provides liability protection, which may not be crucial depending on what type of contract work you're doing. If your business grows substantially or has liability risks, then consider it. But for now, focus on tracking expenses and making your quarterly estimated tax payments.

An S-Corp can save on SE taxes, but only makes sense once you're making at least $60-80k from your independent work. At $27k, the extra costs of running an S-Corp (separate payroll, more complex tax filing, annual fees) would likely outweigh any tax savings. Plus you'd need to pay yourself a "reasonable salary" which would still be subject to FICA taxes. The tax savings only apply to distributions above that reasonable salary amount. For smaller amounts of contract income, stick with Schedule C filing.