Just wanted to add one more important point that might help your aunt's case - if the restaurant is requiring her to wear specific uniforms, follow their dress code, or use their point-of-sale system and procedures, these are all strong indicators of employee status rather than independent contractor. The IRS looks at three main factors: behavioral control (how and when work is done), financial control (business expenses, payment method), and relationship type (permanency, benefits). From what you've described, your aunt clearly falls under employee classification on all three factors. I'd also suggest having her keep detailed records going forward - clock in/out times, any direction she receives from management, scheduled shifts vs. actual flexibility, etc. This documentation could be valuable not just for the current tax situation but also if there are any future issues with the restaurant's employment practices. One last thing - make sure she knows that even if the restaurant refuses to correct the classification, she's still entitled to any tips that were withheld or improperly handled under their contractor classification. Employee vs. contractor status affects tip reporting and distribution too.

This situation is incredibly frustrating but unfortunately very common in the restaurant industry. Your aunt is absolutely being misclassified - everything you've described (set schedule, formal hiring process, using their equipment, following their procedures) screams "employee" not "contractor." Here's what I'd do in this exact order: **First approach the restaurant diplomatically.** Sometimes new businesses genuinely don't know the rules. Print out the IRS's worker classification guidelines and politely explain that based on her working conditions, she should receive a W-2. Many restaurants will correct this quickly once they understand the legal requirements. **If they refuse, don't panic.** File Form SS-8 with the IRS to get an official determination of her worker status. This can take months, but it puts you on the right track. Simultaneously, when filing her taxes (which you still need to do by April 15th regardless), use Form 8919 with reason code G to indicate you're disputing the classification. This way she only pays the employee portion of FICA taxes, not the full self-employment tax. **Document everything now** - her work schedule, any training materials, uniforms, employee handbook, the job posting she applied to. This evidence will be crucial if you need to escalate. Don't just accept the 1099 and pay the extra taxes. That's essentially rewarding the restaurant for breaking employment law and will cost your aunt significant money she shouldn't owe.

This has been an absolutely fantastic thread - probably the most practical and informative discussion I've seen about IRS audits and payment app scrutiny. As someone who's been anxiously googling this topic for weeks, finding actual experiences from people who've been through audits is incredibly valuable. I'm a small business owner (marketing consulting) and like many others here, I receive a significant portion of my payments through Zelle - probably around $35K annually. I've been good about reporting all the income, but after reading everyone's experiences, I realize my documentation has been nowhere near adequate. The key insights I'm taking away: 1) The IRS absolutely can and will examine these transactions during audits, 2) They're looking for patterns of unreported income, not specifically targeting payment apps, 3) Good documentation is your best friend, and 4) Separating business and personal accounts is crucial. I'm implementing the spreadsheet tracking system immediately and opening a dedicated business account this week. For anyone else feeling overwhelmed by this topic - it seems like the solution is really about getting organized rather than avoiding these payment methods entirely. Thanks especially to those who shared their actual audit experiences (NebulaNinja, Raúl, AaliyahAli, and others) - your real-world insights are worth their weight in gold for those of us trying to stay compliant and prepared.

This thread has been incredibly helpful! As someone who just started freelancing and receives about 80% of my payments through Zelle, I was really worried about potential audit issues. Reading everyone's actual experiences has been so much more valuable than the vague advice you usually find online. What really stands out to me is how consistently everyone emphasizes that proper documentation is the key, not avoiding payment apps entirely. The fact that Zelle transactions go directly through your bank (thanks for that clarification!) means they're already part of your regular banking records anyway. I'm definitely implementing the spreadsheet system that multiple people have recommended - tracking source, amount, date, and purpose seems like such a straightforward approach. Also planning to open a separate business account immediately, even though I'm still small-scale. One thing that gives me confidence is hearing from people like NebulaNinja and Raúl who actually went through audits and found the agents were reasonable as long as they could explain their transactions and show they'd been reporting income properly. It makes the whole process seem much less scary when you know what to expect and how to prepare. Thanks to everyone for sharing your real experiences rather than just speculation - this is exactly the kind of practical advice new freelancers like me need to stay compliant and organized from the start!

I'm dealing with a similar situation right now and wanted to share what I learned from talking to a tax professional. The key thing to understand is that receiving a 1099-NEC automatically makes you "self-employed" in the eyes of the IRS, regardless of whether you feel like a business owner or not. Here's what you need to know: - Yes, you must file Schedule C to report the 1099-NEC income - You'll also need to file Schedule SE for self-employment tax (the dreaded 15.3%) - BUT you can deduct business expenses to reduce your taxable income Don't overlook potential deductions! Even if you worked on-site, you might be able to deduct things like: - Professional development courses or certifications - Work-related supplies you purchased - Portion of cell phone bill if used for work - Mileage for work-related travel - Professional association dues The good news is that tax software really does make Schedule C much easier than it looks. I was terrified at first but it walked me through everything step by step. Just make sure you keep good records of any expenses you claim - receipts, bank statements, etc. Hang in there - once you get through this first 1099 tax season, you'll feel much more confident about the process!

I totally get the anxiety around this - I was in a very similar spot a few years back! You're right to be confused because the terminology is misleading. When you receive a 1099-NEC, you're technically considered "self-employed" by the IRS even if you were just doing regular work for someone else. Yes, you absolutely need to file Schedule C. The 1099-NEC income goes on Schedule C as business income, and then the profit (after deductions) flows to your main tax return. I know it feels weird calling yourself a "business" when you were just showing up to do assigned work, but that's how the tax code treats contractor relationships. A few practical tips from my experience: - Don't skip Schedule C thinking you can put the income somewhere else - the IRS will notice the mismatch - Look for any legitimate business expenses you can deduct (supplies, equipment, work clothes, etc.) - You'll also need to complete Schedule SE for self-employment tax, which is about 15.3% - Consider setting aside money for quarterly payments if you'll have similar income this year The first time is definitely the hardest, but once you understand the process it becomes much more manageable. Tax software really does help walk you through Schedule C step by step. You've got this!

I was in the exact same boat last year with my weekend retail job! The Multiple Jobs Worksheet had me withholding like $80 per paycheck from a job that only paid $150. It was ridiculous. Here's what actually worked for me: I ignored the worksheet completely and used a much simpler approach. For my main job, I filled out the W4 normally with all my standard deductions and credits. For the part-time job, I just put "Single" as filing status and left everything else blank - no extra withholding calculations. At the end of the year, I ended up owing about $200 in taxes, which was totally manageable compared to having hundreds of dollars over-withheld throughout the year. The key is that your combined withholding from both jobs just needs to cover your total tax liability - it doesn't have to be perfectly calculated from each individual paycheck. If you're worried about owing too much, you could always add like $20-30 per paycheck to your main job's W4 in Step 4(c) instead of letting the part-time job take half your pay. Way more reasonable and you still get to actually benefit from the extra work you're putting in!

I've been dealing with this exact same frustration! The W4 Multiple Jobs Worksheet is honestly terrible for part-time second jobs. I ended up finding a much simpler solution that's worked really well for me. Here's what I do: On my main full-time job's W4, I fill everything out completely - filing status, dependents, deductions, the works. This W4 does the "heavy lifting" for my tax situation. For my part-time job, I just use the basic settings - correct filing status and check the box in Step 2(c) for "Multiple Jobs" but I don't do any of the crazy worksheet calculations. This typically withholds a bit more than standard rates but nowhere near the excessive amounts the worksheet suggests. If you want to be extra cautious, you could add maybe $15-25 per paycheck in Step 4(c) of your MAIN job's W4 instead of letting your part-time job massacre your paycheck. This way you're still covered tax-wise but you actually get to keep most of your part-time earnings. I've been doing this approach for two years now and have never owed more than a few hundred at tax time, which is way better than having thousands over-withheld throughout the year. The whole point of a second job is extra money - don't let the W4 worksheet defeat that purpose!

I've been reading through all these responses and honestly, it's such a relief to see I'm not the only one dealing with this kind of situation! The consistent advice and real experiences everyone has shared here are incredibly reassuring. What strikes me most is how the actual outcomes people described are so much less scary than what I was imagining. Hearing specific numbers like $500-800 in additional taxes plus manageable penalties really helps put this in perspective. I've been catastrophizing this for months when it sounds like it's actually a pretty routine situation that the IRS handles all the time. The point about voluntary amendments being treated more favorably than waiting for the IRS to catch it through their matching program really resonates. I'd much rather be proactive and show good faith than potentially face a more intimidating letter down the road. I think I'm finally ready to stop overthinking this and just tackle the 1040-X. The three-year deadline gives me plenty of time, but carrying this anxiety around isn't worth it when the solution seems so straightforward. Thank you to everyone who shared their experiences - it's exactly what I needed to hear to move forward with confidence!

I'm actually dealing with this exact same situation right now! I underreported about $4,200 in Uber income from 2022 and have been stressing about it for weeks. Reading through everyone's experiences here has been incredibly helpful and reassuring. What really stands out to me is how consistent everyone's advice is - amend within the 3-year window (which gives us until April 2026), expect to owe roughly 15.3% self-employment tax plus your regular income tax rate on the unreported amount, and that voluntary amendments typically receive more favorable treatment than waiting for the IRS to catch it. The real numbers people have shared are so much more manageable than what my anxiety was conjuring up. It sounds like most folks ended up owing $500-1000 in additional taxes plus reasonable penalties, which is definitely something I can handle rather than the financial catastrophe I was imagining. I think what's been paralyzing me most is the fear of the unknown, but hearing from so many people who've actually been through this process successfully has given me the confidence to stop procrastinating. Time to gather my documents and file that 1040-X! Thanks to everyone who shared their experiences - this community support makes all the difference when dealing with tax anxiety.