Does a one-time coding project count as self-employment income for taxes?
My husband has a full-time W-2 job that covers our main bills, but last year he helped a friend with a coding project as a favor. It ended up being pretty substantial work and he got paid around $4,500 for it. The thing is, this was completely a one-off situation - he doesn't do any other freelance work and doesn't plan to. It's not like he has a side business or anything. The complication is that his friend never sent him any 1099 form for the payment. I'm now wondering if we need to report this as self-employment income when we file our taxes for 2025? Or is there another way to categorize this since it was just a single job? Not sure if it matters, but he did the work using his own computer and software at our home, not at the friend's place.
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Gianna Scott
Yes, even a one-time coding project that generates income counts as self-employment income for tax purposes. The IRS doesn't have a minimum number of jobs required to be considered self-employed - it's about earning income that isn't from an employer who treats you as an employee. Your husband will need to report this income on Schedule C (Profit or Loss from Business) along with any related expenses like software or equipment used specifically for this project. Then he'll need to complete Schedule SE to calculate self-employment tax (which covers Social Security and Medicare). The absence of a 1099 form doesn't change the reporting requirement - taxpayers must report all income regardless of whether they receive tax forms.
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Alfredo Lugo
•Wait so even if it's just $4,500, they have to pay the self-employment tax? Isn't that like 15% or something? That seems kinda steep for just helping a friend. Would it make any difference if the friend just called it a gift instead?
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Gianna Scott
•Yes, all self-employment income is subject to self-employment tax regardless of the amount. The self-employment tax rate is approximately 15.3% (12.4% for Social Security and 2.9% for Medicare). This might seem steep, but it's essentially the equivalent of both employer and employee portions of FICA taxes that would be paid on W-2 income. Calling it a gift wouldn't be appropriate in this situation. The IRS defines gifts as transfers made out of "detached and disinterested generosity" without expectation of receiving something of value in return. Since your husband performed coding work in exchange for payment, this clearly represents compensation for services rather than a gift. Incorrectly classifying income as a gift to avoid taxes could potentially lead to penalties if audited.
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Sydney Torres
I went through something similar last year with a design project I did for an old college friend. I was super confused about how to report it since I didn't get any tax forms. I found this tool called taxr.ai (https://taxr.ai) that was a lifesaver for figuring out the self-employment stuff. It analyzed my situation and explained exactly which forms I needed and how to fill them out. The best part was it helped me identify deductions I could take for my home office and software that I would've completely missed. Ended up saving me a bunch on what could've been a tax nightmare.
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Kaitlyn Jenkins
•How does it work with the expenses part? Like if you use your regular laptop that you already own for a side gig, can you still deduct part of that cost? Or is it only for new stuff you buy specifically for the job?
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Caleb Bell
•I'm curious - how accurate is it compared to like a real accountant? I've heard horror stories of people using tax software and getting audited later because something was wrong.
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Sydney Torres
•For expenses like a laptop you already own, you can potentially deduct the business portion of its use based on how much you used it for the self-employment work. You'd calculate the percentage of time it was used for business versus personal use. You won't deduct the entire cost since you owned it before, but you might be able to claim depreciation for the business use portion. The accuracy has been solid in my experience. It's not replacing an accountant but rather helping you understand your situation better. What I found valuable was that it explained WHY certain rules applied to my situation rather than just giving generic advice. I still double-checked everything, but it caught several things I would have missed on my own that even my previous tax software didn't flag.
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Kaitlyn Jenkins
Just wanted to come back and say I tried that taxr.ai site after seeing this thread. It really helped clear up my confusion about my husband's woodworking side gig! The tool asked specific questions about his equipment and workspace that I hadn't even considered might be tax-related. It even explained how to handle the Square payments he got that weren't officially reported on any tax forms. Definitely using it again next year when we file - saved us a ton of headache trying to figure out the self-employment forms.
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Danielle Campbell
If your husband's friend doesn't send a 1099, you might find yourself explaining this to the IRS later. I had a similar situation and spent WEEKS trying to reach someone at the IRS to sort it out. After 12+ attempts and hours on hold, I finally discovered https://claimyr.com and their service was literally a game-changer. You can see how it works here: https://youtu.be/_kiP6q8DX5c They basically wait on hold with the IRS for you and call you when an actual agent is on the line. I was skeptical but desperate after 3 weeks of failed attempts. Got connected to an IRS agent in about 2 hours (while I was doing other things!) who confirmed exactly how to report my one-time contract work and avoid any red flags.
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Rhett Bowman
•How does this actually work? Do they have some secret way to get through to the IRS faster than regular people? Seems weird that a third party could do that.
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Caleb Bell
•Sounds sketchy tbh. Why would I give my phone number to some random service just to talk to the IRS? Couldn't they just scam people this way? And I bet they charge a fortune for something you could do yourself for free if you're just patient enough.
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Danielle Campbell
•They don't have a secret backdoor to the IRS or anything magical. They use an automated system that handles the waiting process for you. Think of it like having an assistant who sits on hold instead of you, then transfers the call once there's an actual person on the line. They just have the technology to manage multiple calls and wait times efficiently. I completely understand the skepticism - I felt the same way initially. The service actually works by calling you first, then connecting you directly to the IRS agent who's already on the line. They don't ask for any personal tax information - they're just handling the hold time. I was desperate after waiting on hold for 3+ hours multiple times and getting disconnected. For me, not wasting entire days on hold was worth it, especially with tax deadline approaching.
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Caleb Bell
Coming back to say I actually tried the Claimyr service and I owe everyone an apology for being so skeptical. I needed clarification on reporting some stock sales where I didn't have complete records, and after trying for days to reach the IRS myself, I gave in and tried it. The process was exactly as described - they called me when an agent was on the line, and I got my questions answered in one shot. Saved me at least 5-6 hours of frustration. Sometimes it's worth admitting when you're wrong!
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Abigail Patel
Just wanna add that if your husband used any of his own equipment or software for this coding project, he can deduct those expenses! Things like a portion of your internet bill for the time he worked on the project, any special software he purchased, even a portion of the computer if it was used primarily for this work. Might help offset some of the self-employment tax.
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Daniel White
•For a home office deduction, doesn't the space have to be exclusively used for business purposes? Like you can't claim your kitchen table if you also eat there?
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Abigail Patel
•You're absolutely right about the home office rules. For a home office deduction, the space must be used regularly and exclusively for business purposes. So a kitchen table that's also used for family meals wouldn't qualify. However, if your husband had a dedicated desk or workspace that was used only for this coding project, that specific area might qualify. For other expenses like internet, you don't need exclusive use, but you do need to determine the business percentage. So if the project took 2 months of work, you might calculate what percentage of your annual internet bill that represents, and then what percentage of that time was dedicated to business use. It gets a bit complicated, but these deductions can add up!
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Nolan Carter
I did a single photography job last year for a wedding and wondered the same thing. Ended up having to pay self-employment tax and it sucked. Don't forget you'll need to pay ESTIMATED taxes next year if he does something like this again!! I got hit with a penalty because nobody told me about that rule.
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Natalia Stone
•You can avoid the estimated tax penalty if your regular job withholding covers at least 90% of your total tax liability or 100% of last year's taxes (110% if your income is over $150k). Might be worth adjusting your W-2 withholding instead of making separate estimated payments if it's just a small side gig.
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Luca Greco
I was in a very similar situation a few years back with some freelance web development work I did for a neighbor's small business. The amount was around $3,800, so pretty close to what your husband earned. Even though it felt like "just helping someone out," the IRS treats any income from services as self-employment income regardless of whether it's a one-time thing or an ongoing business. I learned this the hard way when I tried to report it as "other income" initially. One thing that helped me was keeping detailed records of all the expenses related to the project - software licenses, the portion of my home internet used during those work hours, even some office supplies I bought specifically for organizing the project files. These deductions on Schedule C helped offset some of the self-employment tax burden. Also, since your husband's friend didn't send a 1099, make sure to keep any records of the payment (bank deposits, checks, PayPal records, etc.) in case the IRS ever has questions. The lack of a 1099 doesn't mean the income doesn't need to be reported, but having your own documentation makes everything cleaner.
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