How would you determine if it's royalty income vs. other types of payments? The 1099-NEC doesn't really specify the nature of the payment, just the amount.

You'd need to look at supporting documentation from the union explaining the nature of the payments. Ask your client for any letters, statements, or the original agreement with the union that established these payments. The description might use terms like "residuals," "royalties," or "use of intellectual property." Also check Box 1 of the 1099-NEC to see if there's any description near the amount. Some payers will include a brief memo there. If there's nothing there, your client should contact the union's benefits office directly and ask for a written explanation of what these payments represent.

That's why I stopped going to those tax prep chains. They charged my mom $350 to file a return that literally only had Social Security income on it. Total scam.

Would this work for crypto? I've got some ETH that's gone up like crazy and I'm trying to figure out how to cash some out without giving half to Uncle Sam.

Yes, it can work for cryptocurrency. The key is that the trust sells it after you've donated it, so the trust itself doesn't pay capital gains tax on the appreciation. You'll need to find a trustee comfortable with handling crypto assets though, as some traditional trustees aren't familiar with the process. Keep in mind that you're ultimately giving a portion to charity - this isn't a strategy to avoid taxes completely while keeping all the money. But the tax benefits plus the income stream can make the math very favorable compared to just selling and paying capital gains tax directly.

I looked into something similar for my business. The Wyoming LLC part can work for privacy and some liability protection, but it doesn't magically change your tax situation. The IRS follows the money regardless of how many entities you put in between. And trying to loan yourself money through your own entities gets really tricky really fast.

Thanks for this! Would I just list "temp worker" as my business on the Schedule C? And for the home office, do I need to have a dedicated room or can it be like a desk in my bedroom? I'm worried about getting audited if I claim too much.

You can list "Telecommunications Contractor" or something similar as your business. For home office, the IRS prefers a dedicated space, but it doesn't have to be an entire room - a dedicated desk area that's used regularly and exclusively for work can qualify. Just measure that specific area for your deduction calculation. Don't worry too much about an audit if you're claiming legitimate expenses. Just keep good records of your expenses and be reasonable with your deductions. For example, don't claim 100% of your internet if you also use it for personal stuff - 30-50% is more reasonable depending on how much you use it for work.

This is such important advice! I learned this the hard way too. The IRS expects you to pay as you earn throughout the year. I got hit with penalties my first year as a contractor because I didn't know about quarterly payments.

That's a really good point I hadn't considered! The job is offering a high-deductible plan ($2,750) while my partner's plan has a $1,000 deductible. And you're right about the gap - I'm not sure if there would be a waiting period to get back on his insurance after my job ends. Do you know if special enrollment periods apply when you lose job-based coverage?

Yes, losing job-based coverage does qualify as a special enrollment event that would allow you to join your partner's plan outside the normal enrollment period. You typically have 30 days from the loss of coverage to request enrollment in the new plan. As for the deductible difference, that's definitely something to consider carefully. Also look at the premium costs - what would your employer charge versus what your partner's paycheck deduction would be for adding you? Sometimes the premium difference can outweigh the deductible savings. And don't forget to compare the networks - make sure your doctors are covered in both plans before making a decision.

This is super important! I got a high-paying temp job last year and didn't realize it was 1099 until I got my first check with NO taxes taken out. Was a huge shock when tax time came around. OP should definitely clarify if it's W-2 or 1099 before making any decisions.

How do you return an IRS check properly? Do you just write "VOID" on it and mail it back, or is there a specific process to follow?

There's a specific process. You should mail the check back to the IRS location listed in the instructions that came with it (or if no instructions, to the IRS office that services your area). Include a brief letter explaining why you're returning it. Don't write VOID on the check - send it back uncashed exactly as you received it. Include your taxpayer info (name, address, SSN) and phone number in your letter. Send it certified mail so you have proof you returned it. The IRS website has instructions for returning erroneous refunds - search for "returning erroneous refund" on IRS.gov.

I second this! Transcript is the fastest way to see what's happening. My cousin got a surprise refund last year, and the transcript showed someone had filed an amended return with her info. Turned out to be identity theft.