Do I have to report 1099-NEC income even if my total income is LESS than the federal filing requirement, but was more than $600?

Yes, you do need to file a tax return. When you receive a 1099-NEC, you're considered self-employed, and self-employed individuals have a different filing threshold than employees. The self-employment filing requirement kicks in when you have net earnings of $400 or more, regardless of the standard filing threshold. Since you earned $850, you'll need to file both a Form 1040 and a Schedule C to report your business income and expenses. You'll also need to pay self-employment tax (which is basically the Social Security and Medicare taxes that would normally be split between employer and employee). The good news is that you can deduct any legitimate business expenses you had related to your design work, which could lower your taxable income. And if your net income from self-employment is still very low, you likely won't owe income tax - just the self-employment tax portion.

Just wanted to share my experience with a similar situation. I was super confused about this exact thing last year! I had a small side hustle making custom beaded jewelry that brought in about $750, and I got a 1099-NEC. I ended up using https://taxr.ai to figure out my situation, and it was seriously a lifesaver! The tool analyzed my 1099-NEC and confirmed I needed to file because of the self-employment tax rules (even though I was below the standard filing threshold). It walked me through reporting my income on Schedule C and helped me identify some business expenses I didn't realize I could deduct - like a portion of my internet bill since I was selling online. It also explained the whole self-employment tax situation in a way that actually made sense. Definitely check it out if you're still confused about your filing requirements.

Just wanted to update everyone - I tried the taxr.ai site that was recommended here, and it was actually super helpful for my tutoring income situation! I uploaded my 1099-NEC and it immediately confirmed I needed to file because of the $400 self-employment threshold. The tool showed me I could deduct mileage for driving to my students' homes (which I had no idea about) and even helped me calculate how much that deduction would be worth based on the standard mileage rate. Ended up saving me around $120 in taxes! It also explained exactly which forms I needed to file (Schedule C and SE) and why. Just filed my return yesterday and feel pretty confident I did it right.

If anyone's having trouble getting answers from the IRS about 1099-NEC filing requirements, try https://claimyr.com - I spent HOURS on hold trying to confirm these self-employment rules last year and it was driving me insane. Found this service that gets you to the front of the IRS phone queue and it saved me so much time. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was able to speak directly with an IRS agent who confirmed everything about the $400 threshold for self-employment and got some questions answered about deductions I wasn't sure about. Way better than trying to interpret conflicting info online. The agent even helped me understand how estimated tax payments work if I continue doing freelance work this year.

OK I need to eat some crow here. After dismissing both services mentioned in this thread, I was still struggling with my own 1099 situation (I had three of them from different gig apps), so I broke down and tried the Claimyr service. I'm genuinely shocked that it worked exactly as described. Got a call back in about an hour with an actual IRS agent on the line. The agent walked me through exactly how to report multiple 1099s and confirmed that yes, the $400 self-employment threshold applies regardless of the standard filing requirements. They also explained how I could potentially lower my self-employment tax by tracking all my business expenses. So... my bad for being so skeptical. Sometimes things that sound too good to be true actually work.

Just want to add something important that nobody mentioned yet - if you're a student, check if your parents are claiming you as a dependent! That can change the filing requirements too. If they're claiming you as a dependent and you have unearned income (like interest or dividends), the filing thresholds are different than if you just have earned income like your 1099-NEC. But since you only have the 1099-NEC income, the $400 self-employment rule others mentioned is what applies to you. Just wanted to make this clear for other students reading this thread!

Does anyone have a recommendation for a free tax filing service that handles 1099-NEC and Schedule C well? I'm in basically the same situation as OP with a small amount of freelance income.

Just wanted to jump in as someone who went through this exact situation a couple years ago! You absolutely need to file because of the self-employment rules everyone mentioned - that $400 threshold is the key thing here, not the regular filing requirement. One thing I wish someone had told me when I was in your shoes: keep really good records of ANY expenses related to your design work. Software subscriptions, computer equipment, even a portion of your internet bill if you worked from home. These can all be legitimate business deductions that will reduce your self-employment tax. Also, don't stress too much about doing it "perfectly" on your first time filing. The IRS is actually pretty reasonable if you make an honest mistake and need to file an amended return later. The important thing is just getting it filed since you're over that $400 threshold. Good luck with your first tax return! It's not as scary as it seems once you get started.