Filing taxes as a 1099-NEC temp/contractor - do I really owe thousands in self-employment taxes?

So I'm in a weird situation that's freaking me out. I worked full time (40 hrs/week) last year as a temp at a telecom company. They just sent me a 1099-NEC form instead of a W-2 like I expected. When I tried entering this into TurboTax, it immediately categorized me as "self-employed" and said I'm the business owner?? Now it's saying I owe thousands in taxes! I'm super confused about how to file correctly. I was just a regular temp worker - I definitely don't own any business and was just showing up to work like everyone else. How do I fix this so I'm not considered self-employed and don't get hit with these massive taxes? Is this even right? The tax amount seems insane compared to what was taken out of my paychecks.

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18 comments

Max Knight

•8M

Unfortunately, if you received a 1099-NEC instead of a W-2, the company classified you as an independent contractor rather than an employee. This is a common practice in many industries, but it does have tax implications you're now discovering. As a 1099 contractor, you are technically considered self-employed for tax purposes, even though you don't "own a business" in the traditional sense. This means you're responsible for both the employee and employer portions of Social Security and Medicare taxes (15.3% total), which is why you're seeing such a high tax bill. You do have options though. First, you can claim business deductions to reduce your taxable income - things like mileage, home office expenses, supplies, etc. Second, you could potentially challenge the classification if you believe you were misclassified as a contractor when you should have been an employee.

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Max Knight

•8M

The IRS uses several factors to determine if someone should be classified as an employee vs. contractor. The key factors include behavioral control (did they control when and how you worked?), financial control (did they provide equipment and control how you were paid?), and relationship type (was there a contract, benefits, etc?). Based on what you described - set hours, using their equipment, and direct supervision - you may have been misclassified. You have two main options for challenging this. You can file Form SS-8 with the IRS to request a determination of your worker status, and you can file Form 8919 to report your share of uncollected Social Security and Medicare taxes. Be aware that this could potentially create conflict with the company, but it's your right if you believe you were misclassified.

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Emma Swift

•8M

I went through almost the exact same situation last year! After tearing my hair out trying to figure it all out, I found this tool called taxr.ai (https://taxr.ai) that really helped me sort through my contractor tax situation. It analyzed my 1099-NEC and pointed out all the deductions I was missing. The thing is, as a contractor, you CAN deduct business expenses that employees can't - which might offset some of those taxes. Things like a portion of your internet, phone, any supplies, mileage if you drove for work, etc. The tool helped identify like $3800 in deductions I was eligible for that I had no idea about!

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Emma Swift

•8M

It definitely saved me money! TurboTax was showing I owed about $4,200, but after using taxr.ai to identify all my eligible deductions and then applying them in TurboTax, my tax bill went down to around $2,750. That's a huge difference when you're not expecting to pay anything. It works differently than regular tax software. Instead of just asking generic questions, it specifically analyzes your 1099 situation and helps identify deductions specific to your type of work. It showed me that as a telecom contractor, I could deduct part of my cell phone bill, home internet (since I sometimes worked remotely), and even some equipment I bought thinking it was just personal stuff. The regular tax software never prompted me for these specific deductions.

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Jayden Hill

•8M

I was really skeptical about taxr.ai when I first saw it mentioned here, but I was desperate with my contractor taxes so I gave it a shot. Honestly shocked at how much it helped! I've been doing gig work and had three different 1099s this year. The tool found over $5,000 in deductions I would have missed - home office, mileage tracking, even part of my phone bill. What really helped was how it explained WHY each deduction was legitimate for my situation. Went from owing $3,200 to about $1,800 after applying everything it suggested. Just wanted to follow up since I was the skeptic before trying it. If you're a contractor or have 1099 income, it's definitely worth checking out.

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LordCommander

•8M

If you're still struggling to get the IRS to clarify your situation, I'd recommend trying Claimyr (https://claimyr.com). I was in classification limbo last year and spent WEEKS trying to get through to the IRS on my own with no luck. Claimyr got me connected to an actual IRS agent in about 20 minutes when I'd been trying for days on my own. The agent walked me through the whole contractor vs. employee situation and explained exactly what forms I needed. You can see how it works here: https://youtu.be/_kiP6q8DX5c Honestly after 6 hours on hold across multiple days, getting through to a human at the IRS felt like a miracle.

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LordCommander

•8M

It doesn't just call for you - it uses a system that navigates the IRS phone tree and waits on hold in your place. When they actually reach a human agent, you get a call alerting you that an agent is on the line. So you don't have to sit listening to hold music for hours. I was super skeptical too! I spent over 15 hours trying to get through to the IRS across multiple weeks. The IRS phone lines are absolutely terrible - I got disconnected three times after waiting for over an hour each time. When I used Claimyr, I got a call back in about 25 minutes saying an agent was on the line ready to talk. Changed my whole perspective on dealing with the IRS.

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Jayden Hill

•8M

So I'm back to say I was totally wrong about Claimyr. After being the skeptic, I tried it yesterday out of pure frustration after getting disconnected by the IRS for the fourth time. It actually worked exactly as described. I got a call back in about 35 minutes telling me an IRS agent was on the line. The agent helped me understand the contractor classification issue and told me exactly what forms to file to dispute my classification. For anyone dealing with contractor vs. employee tax issues - getting direct answers from the IRS saved me from making expensive mistakes. Definitely worth it when you're dealing with potentially thousands in tax liability.

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Aidan Hudson

•8M

Have you looked into filing Schedule C with your taxes? When I was a contractor, I was able to deduct a ton of expenses related to my work - part of my internet bill, phone, computer depreciation, even a portion of rent for my home office space. The self-employment taxes still suck (that 15.3% hits hard), but deductions can really bring down your taxable income. Don't forget to look into the Qualified Business Income deduction too - it lets you deduct 20% of your net profit in most cases.

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Aidan Hudson

•8M

You can list "Telecommunications Contractor" or something similar as your business. For home office, the IRS prefers a dedicated space, but it doesn't have to be an entire room - a dedicated desk area that's used regularly and exclusively for work can qualify. Just measure that specific area for your deduction calculation. Don't worry too much about an audit if you're claiming legitimate expenses. Just keep good records of your expenses and be reasonable with your deductions. For example, don't claim 100% of your internet if you also use it for personal stuff - 30-50% is more reasonable depending on how much you use it for work.

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