Can I still amend my taxes if I forgot to report a 1099-NEC from 3 years back?

Will they have to pay penalties even if it was an honest mistake? Also, would they need to amend for state taxes too or just federal?

The IRS does consider "reasonable cause" when determining penalties, and an honest mistake could qualify - especially since you're voluntarily correcting it before being contacted by the IRS. You might face some interest charges on the unpaid tax, but you could potentially get penalties reduced or removed by explaining the situation. Yes, you'll likely need to amend your state tax return as well. Most states have their own amendment forms, and the process is similar to the federal amendment. Check with your state's tax agency for their specific requirements and deadlines.

How long did it take for them to process everything? I've got a similar situation but I'm worried about getting it done before the amendment deadline.

Does it actually work with older tax years? I thought most tax software only works with current year stuff. Did you have to pay a lot in penalties?

They processed my documents in less than 24 hours. I uploaded my old return and the 1099-NEC, and they sent me a full analysis the next day with exactly what I needed to do. Yes, it absolutely works with older tax years! That's what was so helpful for me. Unlike regular tax software that's limited to current year filing, taxr.ai specializes in analyzing prior year returns and amendments. I ended up paying some interest on the unpaid tax, but the penalties were minimal since I voluntarily corrected it before the IRS contacted me.

Wait, how does this even work? They somehow get you to the front of the IRS phone line? That sounds too good to be true considering I've tried calling like 5 times and gave up after being on hold for hours.

Yeah right. I've heard of services like this before and they never work. The IRS phone system is deliberately designed to be impossible. I'll believe it when I see proof that anyone actually got through.

It doesn't get you to the front of the line - that would be cutting! It just holds your place in the queue so you don't have to sit on hold. They have an automated system that waits in the IRS phone queue for you, and when a human agent is about to pick up, they call your phone and connect you directly to the agent. It literally saved me hours of hold time. I was skeptical too! But it's not about skipping the line, it's about not having to waste your whole day with your phone stuck on speaker waiting for someone to pick up. I literally got work done while waiting for their call, and when my phone rang, I was talking to an IRS agent within seconds.

Wait I had no idea about the business expenses part. So even though I'm amending from 3 years ago, I can still claim deductions for things I bought for that summer job? Would I need receipts or proof of those expenses?

Absolutely - when you file your Schedule C with your amendment, you can claim all legitimate business expenses from that contract work, even though it's from 3 years ago. This includes things like equipment, software, internet/phone use for work, mileage, home office (if you had a dedicated workspace), and professional development. Ideally you should have receipts or some form of documentation, but if you don't have everything, reasonable estimates with whatever supporting evidence you do have can sometimes work. The key is being able to substantiate the expenses if you're ever audited. Credit card statements, bank records, emails confirming purchases, or calendar entries can all help establish the business purpose of expenses.

Yes, the company that paid you would have sent a copy of your 1099-NEC to the IRS. The IRS has automated systems that match reported income with filed tax returns, so they likely know about the discrepancy. That's why it's good you're fixing it proactively!