This thread has been incredibly helpful! I'm also self-employed with COBRA coverage and was making this way more complicated than it needed to be. Just to summarize what I'm understanding from everyone's advice: - My COBRA coverage gets reported on 1095-B (which I don't even need to file) - As self-employed, I should use the self-employed health insurance deduction on Schedule 1, Line 17 - This is much better than trying to itemize medical expenses since there's no 7.5% threshold - The deduction is limited to my self-employment profit One thing I'm still unclear on - do I need to wait for my 1095-B to arrive before I can file, or can I go ahead and file my return with just my COBRA payment records? My insurance company is always slow sending these forms out.

I went through this exact same confusion last year! As a fellow self-employed person with COBRA, I can confirm what everyone else is saying - you want the self-employed health insurance deduction, not the itemized medical expenses route. The key thing that helped me understand this: the 1095-B from your COBRA coverage is just proof you had insurance. You don't submit it with your taxes. What matters for the deduction is how much YOU paid in premiums (not what your former employer contributed). In TurboTax, I found the self-employed health insurance section under "Business Income and Expenses" then "Business Expenses." It asks for the total amount you paid for health insurance premiums during the year. Just enter your total COBRA payments and you're done. One heads up - make sure you calculate this correctly if you had any employment income during the year too. The deduction can get limited if you were eligible for employer coverage during part of the year, but since you mentioned you've been contracting all year, you should be fine to deduct the full amount (up to your self-employment profit). Good luck with your return!

I'm in a similar boat - just got my first 1099-INT and wasn't sure about filing requirements. After reading through all these responses, it sounds like while you're not technically required to file with just $475 in interest income (well below the $14,600 standard deduction), there might still be good reasons to file a simple return anyway. The point about preventing automated IRS notices really resonates with me. I'd rather file a basic return and avoid any potential headaches down the road. Plus, if there was any federal tax withheld on your 1099-INT (check box 4), you'd definitely want to file to get that refunded. Have you checked whether your state has different filing requirements? That seems to be catching a lot of people off guard based on what others are sharing here.

Based on your situation, you're correct that you're not required to file federal taxes with only $475 in interest income - that's well below the $14,600 standard deduction for single filers in 2024. However, I'd still recommend filing a simple return for a few practical reasons. First, check box 4 on your 1099-INT to see if any federal tax was withheld. If so, you'll only get that money back by filing. Second, filing prevents potential automated notices from the IRS since their computers see the 1099-INT but no corresponding tax return. I've seen people get confusing letters about "unreported income" even when they weren't required to file. Third, don't forget about state taxes - many states have much lower filing thresholds than federal. Even if you don't owe federal taxes, you might still need to file state returns depending on where you live. The good news is that with only interest income, your return would be very simple. Most free tax software can handle this easily, and you'd likely qualify for free filing through the IRS website. Filing when not required won't increase audit risk - simple returns like yours are actually very low-risk.

I've been following this thread and want to add a few technical points that might help. As someone who's dealt with similar payroll system issues, the zero federal withholding problem often stems from one of three specific technical issues: 1. **Tax table mapping errors**: Sometimes after system updates, the federal tax tables don't properly map to employee records, even though state taxes (and FICA/Medicare which use different tables) continue working normally. 2. **W-4 field parsing problems**: The 2020 W-4 redesign uses different data fields than the old allowance-based system. Some payroll systems have bugs where they misinterpret blank fields as "zero tax liability" rather than "standard withholding." 3. **Employee classification flags**: There might be a backend flag incorrectly marking these employees as exempt or non-resident, even though their visible W-4 data appears normal. For escalating with your payroll provider, ask specifically for "Tier 2 tax compliance support" and mention you need "federal withholding calculation diagnostics" rather than general troubleshooting. Use terms like "Publication 15-T calculations" and "percentage method verification" - this signals you need someone who understands the technical tax computation process. Also consider running a payroll register report for the affected employees and comparing the tax calculation details line-by-line with employees who have correct withholding. Sometimes the pattern becomes obvious when you see the raw calculation data side by side.

I'm not in HR or payroll, but as someone who's had tax withholding issues as an employee, I wanted to mention something that might be worth checking. A few years ago, I had a similar situation where zero federal taxes were being withheld despite a normal W-4. It turned out that when my company switched from paper W-4s to their online onboarding portal, there was a disconnect between what I filled out digitally and what actually got transmitted to the payroll system. The form looked complete on my end and on the HR review screen, but certain fields weren't properly mapping to the backend payroll database. Since you mentioned this started happening over the past 8 months and you're processing around 175 employees, it might be worth checking if your company made any changes to the onboarding process or system during that timeframe. Even something as simple as a software update to your HRIS or onboarding platform could cause data transmission issues. You might want to compare how W-4 information flows from initial collection through to your payroll provider - sometimes there are multiple handoffs where data can get lost or corrupted, even if everything looks normal on the surface.

Just wanted to add one more important point that might help with your situation. When you create that loan agreement (which you definitely should), make sure to include a provision about what happens if payments are late or missed. The IRS pays attention to whether you're treating this like a real business transaction or just a casual family arrangement. I'd also suggest setting up a separate bank account just for this loan if the amount is significant. Having all the payments go through one dedicated account makes record-keeping much cleaner and shows the IRS you're treating this seriously. When tax time comes, you can just pull the account statements and have a clear paper trail of all interest payments received. One last thing - even though you don't have to issue a 1099-INT to your sister, you might want to give her a simple year-end statement showing how much interest she paid you. It'll help both of you with your tax preparations and demonstrates good record-keeping practices.

Great question about documenting family loans properly! I went through this exact situation when I loaned my brother money for his car repair. Here are a few key things I learned that might help: For the year-end statement to your sister, it doesn't need any special IRS formatting - just a clear summary showing total payments received, how much was interest vs principal, and maybe the dates of payments. Think of it like a simple invoice or receipt. I used a basic Word document with columns for "Payment Date," "Amount Paid," "Interest Portion," and "Principal Portion" with totals at the bottom. Regarding what makes it look like a "real business transaction" to the IRS, they typically look for: a written agreement with specific terms, consistent payment schedule (not just random amounts whenever), market-rate interest (which your 6% definitely qualifies as), and evidence that you actually expect to be repaid (like following up on missed payments). The separate bank account idea mentioned above really helps demonstrate this seriousness. One more tip - make sure your loan agreement includes the total loan amount, interest rate, payment schedule, maturity date, and what happens in case of default. Even a simple one-page document covering these basics will go a long way toward satisfying the IRS that this is a legitimate loan rather than a disguised gift.

I've been lurking on this thread and wow, this has been incredibly educational! As someone relatively new to 1099 contracting, I had no idea that training requirements could be such a red flag for misclassification. I always thought if they're paying you for the time, it should be fine, but clearly there's a lot more nuance to the behavioral control issue. The scripts everyone's shared for reframing these conversations are gold - especially the approach of giving clients options while making the cost implications clear. I'm bookmarking this entire discussion because I suspect I'll need to reference it in the future. It's amazing how something that seems like a simple training request can actually be a much bigger issue about the fundamental nature of the working relationship. Thanks to everyone who shared their experiences and expertise. This community is incredibly valuable for navigating these tricky situations!

This entire discussion has been incredibly valuable! As a fellow contractor dealing with similar boundary issues, I wanted to add one practical tip that's helped me navigate these situations: I now include specific language in my contracts about training and professional development. I have a clause that states something like: "Contractor retains the right to determine methods for acquiring necessary project knowledge and skills. Any client-specific training requests will be evaluated on a case-by-case basis and may be subject to additional fees and scheduling constraints consistent with Contractor's independent status." This language has been a game-changer because it sets expectations upfront rather than having to negotiate these issues reactively. When clients see this in the contract stage, they either accept it (which shows they understand the independent contractor relationship) or we can discuss modifications before work begins. For your current situation, I'd echo the excellent advice about offering alternatives while making costs clear. But I'd also suggest using this as a learning opportunity to refine your contract language for future clients. Prevention is always easier than cure when it comes to classification issues!