You're absolutely right to be concerned, but filling out the W9 is really your best option here. As others mentioned, refusing it just means they'll withhold 24% of your future payments for backup withholding, which hurts you more than helping. The reality is that this income was always supposed to be reported - the 1099 doesn't create the tax obligation, it just makes it visible to the IRS. The good news is that as a contractor, you can deduct legitimate business expenses like tools, materials, vehicle expenses for job sites, and even a portion of your phone if you use it for work coordination. For 2024 going forward, I'd recommend keeping detailed records of all your business expenses. Take photos of receipts, track your mileage to job sites, and document any equipment purchases. These deductions can significantly reduce your taxable income from this work. As for previous years - while you're technically supposed to report all income, the IRS typically focuses on compliance going forward rather than auditing past years unless there are major red flags. Getting compliant now and staying that way is usually the best approach.

Just to add to what others have said - you absolutely should fill out the W9. I went through this exact situation with my freelance electrical work a few years ago. One thing that really helped me was setting up a separate business checking account once I started getting 1099s regularly. It makes tracking income and expenses so much easier come tax time. Even though it's "just" weekend work, treating it like a real business from a record-keeping standpoint will save you major headaches. Also, don't panic about the self-employment tax rate. Yes, it's about 15.3%, but remember you can deduct half of that SE tax on your regular tax return, which reduces the effective rate. Plus, with legitimate business deductions (which are substantial in construction - tools, materials, safety equipment, vehicle expenses), your actual taxable income from this work could be significantly lower than what they pay you. The key is getting organized now and keeping good records going forward. The IRS isn't out to get small contractors who are trying to do the right thing.

Had this exact same thing happen to me two years ago! Definitely start with calling 800-304-3107 (the Treasury Offset Program hotline) - they'll tell you exactly which agency took your money and why. In my case it was an old unemployment overpayment from 2018 that I had completely forgotten about. The automated system will give you the contact info for whatever agency has your debt, then you can call them directly to set up a payment plan or dispute it if needed. Pro tip: call super early in the morning (like 7 AM) when the lines aren't as busy. Also make sure you have your SSN ready and write down everything they tell you. The whole process is frustrating but you'll get answers! Let us know what you find out - rooting for you to get this sorted out quickly!

This happened to me last year too! The 800-304-3107 number everyone mentioned is definitely the way to go. Just a heads up though - if it turns out to be student loans like it was for me, make sure you ask about rehabilitation programs when you call the Department of Education. I was able to get my loans out of default and even got a partial refund of previous offsets once I completed the program. It took about 9 months of on-time payments but was totally worth it. Also, if you're struggling financially, definitely mention that when you call - a lot of agencies have hardship programs that can reduce your monthly payments or even pause collections temporarily. The key is being proactive once you know what the debt is for. Good luck getting it sorted out!

That 39% total deduction rate is definitely normal for your situation in California, especially with bonus/backpay included! I went through the exact same shock when I got promoted last year. Here's what's likely happening: Your payroll system is calculating withholding as if you'll earn $5,200 every month for the whole year (that would put you around $62k annually). But since this included one-time payments like backpay and bonus, your actual annual income will probably be lower, meaning you're being over-withheld. A few things that helped me: - Track your year-to-date withholding vs. what you'll actually owe (use the IRS withholding calculator quarterly) - Consider adjusting your W-4 if you're consistently over-withheld, but be conservative - Remember that 401k contributions and health insurance aren't "lost money" - they're benefits for your future Your next regular paycheck without the extras should look much more reasonable. Congrats on the promotion though - that's awesome after 2 years of working toward it!

Just wanted to add my perspective as someone who's been through multiple promotions in California - that 39% rate you're seeing is absolutely normal, especially with bonus pay included. I remember my first big promotion shock too! One thing I learned is to keep your W-4 conservative if your income is going to vary throughout the year. Since you mentioned this was your first $5k+ month and included backpay/bonus, your regular months will likely result in lower withholding rates. The system will balance out over the year. Also consider this: California's progressive tax system means that extra income (like your bonus) gets taxed at your highest marginal rate, which can make the effective rate on that particular paycheck look scary high. But your overall annual tax rate will be much more reasonable. Congrats on the promotion! Two years of hard work paying off is something to celebrate, even if the tax bite stings a bit. You'll adjust to the new income level and the peace of mind that comes with proper withholding is worth it.

I messed this up on my taxes last year and only reported the net amount I received after the marketplace took their cut. My tax preparer caught it during a review and had me file an amended return. The correct way is definitely to report the FULL amount on Line 1 and then deduct the fees separately. The IRS computers match what the marketplace reports to them against what you report. If those numbers don't match, it could trigger a letter or even an audit. Don't make my mistake - it was a headache to fix!

This is such a common source of confusion for new Schedule C filers! Based on all the great advice here, I want to emphasize the key point: always report the GROSS amount customers actually paid on Line 1, then deduct ALL your business expenses on the appropriate lines. I made this same mistake my first year selling crafts online - I only reported what hit my bank account after fees were taken out. When I got that scary letter from the IRS asking about the discrepancy between what the marketplace reported and what I filed, I learned real quick that their computers cross-check everything! The way I think about it now: Line 1 is "what did customers pay for my products?" and then lines 8-27 are "what did it cost me to run this business?" Platform fees, payment processing, shipping supplies, materials - it all goes in the expense section. This actually works in your favor because you get to claim MORE deductions while staying compliant with what the marketplace reported to the IRS. Don't stress too much about getting it perfect on your first try - the important thing is being honest and consistent with your reporting!

My transcript been saying 'as of' date March 4th for like 2 months now... anyone else?

Looking at your transcript, that code 807 "Reduced or removed W-2 or 1099 withholding" is definitely concerning - it means the IRS removed your $10,557 in withholding credits, which is why you now owe $3,472 instead of getting a refund. This usually happens when they can't verify your W-2s or suspect there's an issue with the withholding reported. You'll need to contact them ASAP to find out why they removed it and provide documentation to get it reinstated. The 971 notices should explain what documentation they need from you.