Just wanted to share my experience since I went through this exact same confusion last year! The terminology around W9 vs 1099 forms trips up so many new freelancers. Here's the simple breakdown: You filled out a W9 FOR the company (giving them your tax info), and they should send YOU a 1099-NEC showing what they paid you. If they're calling what they gave you a "W9 with earnings," they're probably just confused about the terminology too. In FreeTaxUSA, go to Income → Self-Employment/1099-NEC and enter your $4,875 there. The system will automatically calculate your self-employment tax (which is about 15.3% on top of regular income tax - this was the biggest surprise for me!). Don't panic about not having the official 1099-NEC form yet. You're legally required to report that income whether you get the form or not. Just keep good records of all payments you received. Pro tip: Start a simple spreadsheet now to track every payment and business expense for next year. As a graphic designer, you can probably deduct software subscriptions, computer equipment, art supplies, and even part of your home internet if you work from home. These deductions saved me hundreds of dollars! The self-employment tax hit is real though - definitely start setting aside 25-30% of future freelance income for taxes. You might also want to look into quarterly estimated payments if you plan to keep freelancing.

I just want to echo what everyone else has said - FreeTaxUSA definitely handles 1099 income well! I've been using it for my freelance writing business for three years now and it's been solid. One thing I'd add that hasn't been mentioned much: make sure you understand the difference between Schedule C (business income/loss) and Schedule C-EZ. For someone like you with $4,875 in income and probably minimal expenses, you might qualify for the simpler C-EZ form, which FreeTaxUSA will automatically suggest if you're eligible. Also, since this is your first year with self-employment income, you won't owe estimated tax penalties as long as you pay at least what you owed last year (assuming you had tax liability). But definitely start planning for quarterly payments next year if you keep freelancing. The self-employment tax is definitely a shock at first - it's essentially the employer and employee portions of Social Security and Medicare that you'd normally split with an employer. But the good news is you can deduct half of it on your tax return, which FreeTaxUSA calculates automatically. Don't stress too much about getting everything perfect your first year. The most important thing is reporting that income accurately, which it sounds like you're already on top of!

As someone who's dealt with similar TurboTax frustrations, I wanted to add another perspective on this. What really gets me is how they've designed their system to make you feel like you're "almost done" before hitting you with the fees. It's psychological manipulation - they know people won't want to abandon all that work they've already put in. I switched to Cash App Taxes (formerly Credit Karma Tax) two years ago after a similar experience to your sister's. Completely free for federal AND state, no hidden fees, and the interface is actually pretty intuitive. The only downside is they don't support some of the more complex tax situations, but for most W-2 earners and people with basic 1099 income, it works great. One thing I always tell people: if a tax service starts as "free" but then wants to charge you for basic forms like state filing or simple deductions, that's a red flag. Truly free services don't nickel and dime you for standard tax situations. Your sister definitely deserved better than getting her data held hostage like that!

This is incredibly helpful information! As someone who works in government services, I see taxpayers struggle with these predatory practices every year. What many people don't realize is that if your adjusted gross income is under $79,000 (the threshold was raised for 2024), you're entitled to completely free tax preparation through the IRS Volunteer Income Tax Assistance (VITA) program. VITA sites are staffed by IRS-certified volunteers and are located in community centers, libraries, schools, and other convenient locations. You can find locations near you at irs.gov/vita. This is especially valuable for situations like your sister's - they'll handle everything for free, including state returns, and there's no risk of surprise fees or data being held hostage. For those who prefer to file online, the IRS also launched their own Direct File pilot program in select states this year. It's completely free and comes straight from the IRS with no third-party involvement. While it's still limited in scope, it's a promising step toward breaking the stranglehold that companies like Intuit have had on tax filing. Thanks for sharing this warning - these companies count on people not knowing about the truly free alternatives that are available.

This is such a timely question! I just went through this exact situation for my 2023 return. Yes, your capital gains from stock sales absolutely go on line 5a of Form 8960 - that's the line for "Net gain or (loss) from disposition of property." What helped me understand it better was realizing that Form 8960 essentially mirrors what you've already reported elsewhere on your return. So the capital gains you're putting on line 5a should match what you calculated on Schedule D and carried over to Form 1040. You're not creating new taxable income - you're just identifying which portions are subject to the additional 3.8% NIIT. As for why it's a separate form instead of being built into the capital gains worksheet - I was frustrated by this too! But it makes sense because the NIIT applies to ALL types of investment income (interest, dividends, rents, royalties, capital gains, etc.), not just capital gains. They needed a comprehensive form to capture everything that qualifies as "net investment income." One thing I wish I'd known earlier: double-check that your MAGI actually puts you over the threshold ($200k single, $250k married filing jointly) before spending too much time on this form. And if you are over the threshold, make sure to look at line 8 for any investment-related expenses that can reduce your NIIT liability!

I went through this same confusion last year with my stock sales! Yes, your capital gains from stock sales definitely go on line 5a of Form 8960 - that's the correct line for "net gain or (loss) from disposition of property." The key thing to understand is that you only need to worry about Form 8960 if your Modified Adjusted Gross Income (MAGI) exceeds the thresholds: $200,000 for single filers or $250,000 for married filing jointly. If you're below those thresholds, you can skip this form entirely. If you do need to file it, the amount you put on line 5a should match what you calculated on Schedule D. You're not creating new taxable income - just identifying which portions are subject to the additional 3.8% Net Investment Income Tax. One helpful tip: the NIIT is calculated on the LESSER of your net investment income OR the amount your MAGI exceeds the threshold. So even if you have large capital gains, you might only owe the 3.8% tax on a smaller portion if your income is just barely over the threshold. Also don't forget to check line 8 for investment-related expenses that can reduce your NIIT liability - things like investment advisory fees or expenses related to managing your investments can often be deducted here!

Thanks for all the helpful advice everyone! I'm leaning toward putting $6,000 for the child tax credits instead of the full $8,000 to ensure I get that refund. Just to make sure I understand - when I file my actual tax return next year, I'll still claim all 4 kids and get the full $8,000 credit regardless of what I put on the W-4, right? The W-4 just affects how much they take out of my paychecks during the year? Also @Emma Johnson, thanks for the tip about checking the box in Step 2(c) since my spouse doesn't work - I definitely would have missed that!

One more thing to consider - since you mentioned your household income is around $135K, you should be aware that the Child Tax Credit starts to phase out at $150K for married filing jointly (in 2025). You're well under that threshold, so you'll get the full $2,000 per child, but it's something to keep in mind if your income increases in future years. Also, with 4 kids, don't forget you might be eligible for the Child and Dependent Care Credit if you have any childcare expenses (even though your spouse stays home, you might have summer camps, after-school care, etc.). That's another credit that could affect your overall tax picture, though it won't change what you put on the W-4 since that credit can't be anticipated in withholding. Your plan to put $6,000 instead of $8,000 sounds solid for getting that refund you're looking for!

I've been dealing with Roth IRA withdrawals for several years now and can definitely confirm what others have said - Form 8606 is absolutely essential for early contribution withdrawals. The key thing to understand is that your brokerage's 1099-R is just reporting that a distribution occurred, but it doesn't provide the IRS with the detailed breakdown of what portion came from contributions versus earnings. Form 8606 serves as your official documentation that you're withdrawing already-taxed contribution dollars rather than tax-free earnings. Without it, the IRS has no way to verify your claim that the withdrawal should be tax and penalty-free. I've seen this exact scenario play out multiple times where people trusted their broker's advice about the 1099-R being sufficient, only to get hit with unexpected tax bills later. The $4,300 difference you noticed in TurboTax is a perfect example of why this form matters so much - it's literally the difference between owing taxes/penalties and not owing them. My advice: always err on the side of providing too much documentation rather than too little when it comes to retirement account transactions. The IRS much prefers clear paper trails, and Form 8606 gives them exactly that for Roth contribution withdrawals.

Based on everyone's experiences shared here, it's crystal clear that Form 8606 is absolutely required for Roth IRA contribution withdrawals before age 59.5. The confusion seems to stem from brokerages giving incomplete or incorrect advice about the 1099-R being sufficient on its own. What I'm taking away from this discussion is that the 1099-R and Form 8606 serve completely different purposes: the 1099-R reports that a distribution happened, while Form 8606 documents the tax character of that distribution (contributions vs. earnings). Without the 8606, the IRS has no way to verify that you're withdrawing already-taxed contributions rather than tax-free earnings. The fact that multiple people here saw significant tax differences (like the original poster's $4,300 change) when they included Form 8606 in their tax software really drives home how important this form is. It's literally the difference between owing taxes and penalties versus not owing them. For anyone still on the fence about this: file the Form 8606. The risk of not filing it far outweighs any perceived inconvenience. Better to be over-documented than to deal with IRS notices and amended returns later.