Did you claim any tax credits like earned income or child tax credit? Those automatically delay processing until at least mid-February because of the PATH Act.

No tax credits like that. Just a standard return with a W-2 and mortgage interest deduction. Nothing complicated! That's why it's so annoying - my husband's return is actually more complex than mine with business income and he gets his refund in like a week. Meanwhile I'm over here waiting 6+ weeks every year for my simple return. Makes zero sense.

I filed Jan 29 and still waiting lol. So much for the "file early" strategy working for everyone 😂

Thanks for this advice! I just contacted the company and you're exactly right - they have a policy of only issuing 1099-NECs for amounts over $600 per project, and I had several smaller projects that added up to the missing amount. They confirmed I should still report everything. How specifically do I add this to my tax return? Is there a specific line or form for "income not reported on 1099-NEC"?

You'll report all your self-employment income on Schedule C, regardless of whether it was on a 1099 or not. There's not actually a separate line for "income not reported on 1099-NEC" - I was simplifying a bit there. The total income you report on Schedule C should be everything you earned from your business, and the IRS doesn't actually require you to break out what was or wasn't on a 1099 on this form. If you're using tax software, there's usually a section where you enter 1099-NEC information, but there should also be a way to add additional self-employment income. Just make sure your total Schedule C gross receipts equals all the money you received from your business activities.

The basics haven't changed much but the standard deduction amount increases slightly each year. The bigger difference might be that you didn't claim as many business deductions? Also, your income from other sources could affect it. Self-employment taxes are pretty consistent at around 15.3% of net business profit.

Thank you so much for this detailed explanation! Quick question - when I refile the rejected return, should I attach any kind of explanation letter about why I'm filing so late? And does using tax software still work for submitting prior year returns or do I need special forms?

You don't need to attach an explanation letter when you refile, but it's not a bad idea to include a brief statement explaining you weren't aware the original filing was rejected. This won't prevent penalties automatically but could help if you request penalty abatement later. Most tax software can handle prior year returns, but you may need to purchase the specific tax year you need as they don't always keep all years available in the current software. Some companies offer prior year versions on their websites. If your situation is fairly straightforward, you can also download the forms directly from IRS.gov for the specific tax year and file by mail. Just be absolutely certain you're using the forms for the correct tax year - they change slightly each year.

I used a tax attorney last year for a similar situation with rejected returns AND self-employment complications. It cost about $1200 but was 100% worth it for the peace of mind. They handled everything, negotiated with the IRS on penalties, and even found deductions I'd missed that nearly covered their fee. Just make sure you find one who specializes in tax resolution, not just general tax preparation.

That's really helpful to know! The $1200 seems steep but honestly if they can find deductions I missed and handle the IRS negotiations, that sounds worth it. Did you find them locally or use some online service?

That's technically tax evasion though. The IRS doesn't care what payment method you use - income is income. Your friends are still supposed to report that money as taxable income, and you're supposed to deduct it properly as a business expense with documentation.

I mean, I'm just sharing what most creators do in practice, not saying it's 100% by the book. You're right that technically all income should be reported. I guess a better suggestion would be to keep payments under the $600 threshold when possible if you want to minimize paperwork, but still document everything properly on your end so you can deduct those expenses. Even if you don't issue a 1099, you can still claim those payments as legitimate business expenses with proper documentation.

That's not how it works. If you're paying someone for services or work they've done for your business, it's not a gift - it's compensation. The IRS looks at the nature of the payment, not what you call it. Calling business payments "gifts" to avoid taxes is misrepresentation that could get you in trouble.

Thank you so much for these specific steps! I was completely lost. I just followed what you said and it worked perfectly. The software did ask me about the earnings and then calculated everything correctly. Really appreciate you taking the time to explain the exact process!

So does this mean the original $5700 contribution isn't taxed again? I'm confused about why the earnings are taxed but not the original contribution amount.