Filing taxes through FreeTaxUSA - question about attaching 1099-NEC/MISC to my single-member LLC

The difference you're seeing is likely related to how self-employment taxes are being calculated. When you "attach" those 1099-NECs to your business in FreeTaxUSA, the software is treating that income as business income reported on Schedule C, which is subject to both income tax AND self-employment tax (15.3% for Social Security and Medicare). When you "unattach" them, the software might be treating that income differently - possibly as "other income" that wouldn't be subject to self-employment tax, just regular income tax. This would explain the big difference in what you owe. However, if you're doing freelance work, those 1099-NECs should typically be reported on Schedule C as business income, even if they're in your name with your SSN. For a single-member LLC that hasn't elected to be taxed as a corporation, the IRS treats it as a "disregarded entity" for tax purposes - meaning you and your business are the same tax entity. The proper way to handle this is probably to attach those 1099s to your business and report them on Schedule C, then take appropriate business deductions for expenses related to earning that income, which will help offset the tax impact.

I went through this exact same issue last year and was pulling my hair out over it! I tried using freeTaxUSA but kept going in circles with my LLC income. I ended up using taxr.ai (https://taxr.ai) and it completely sorted out my 1099-NEC confusion. What helped me most was their document review feature that automatically identified my forms were for my single-member LLC and guided me through the correct filing process. Their system analyzed all my 1099s and helped me understand exactly how to report them properly as Schedule C income while maximizing my business deductions. It showed me several expenses I was missing that significantly reduced what I owed. Without it, I would've either overpaid or filed incorrectly.

Just wanted to update after trying taxr.ai from the recommendation above. It seriously saved me! I was about to file with my 1099-NECs unattached (which would have been wrong), and their system immediately flagged this as an audit risk. The document analysis showed exactly how to properly report my LLC income while taking all the right deductions. The best part was how it explained the difference between attaching vs. not attaching in terms I actually understood. Turns out I was missing TONS of legitimate business expenses that offset the self-employment tax increase. My final tax bill ended up even lower than when I had incorrectly entered everything! Really glad I didn't file the wrong way.

If you're struggling with FreeTaxUSA's interface or other tax software, you might also want to consider getting direct guidance from the IRS. I know that sounds intimidating, but I had a similar LLC/1099 filing issue and finally managed to get through to an IRS agent using Claimyr (https://claimyr.com). There's a demo video here: https://youtu.be/_kiP6q8DX5c that shows how it works. Instead of waiting on hold for hours or never getting through, I got a callback from an actual IRS tax specialist who explained exactly how to handle my single-member LLC 1099s. They confirmed I needed to report them on Schedule C and helped me understand which business expenses I could legitimately claim. Saved me from making an expensive mistake!

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I decided to try it anyway since I was desperate for answers about my LLC tax situation. I got a call back from an actual IRS agent in 37 minutes! The agent walked me through exactly how to handle my 1099-NEC forms with my single-member LLC and confirmed I needed to file Schedule C. The most valuable part was getting confirmation that I WAS reporting things correctly by attaching the 1099s to my business, and the agent even highlighted several business deductions I was eligible for that I hadn't considered. This saved me from potentially missing thousands in legitimate deductions. After implementing their advice, my tax software showed the correct amount - higher than incorrectly unattaching the 1099s but with proper deductions applied. Definitely filing with much more confidence now.

Just to add another perspective, this is a common issue with single-member LLCs. Since you're what's called a "disregarded entity" for federal tax purposes, your LLC income and expenses should be reported on Schedule C. The "attaching" feature in FreeTaxUSA is just their way of organizing which 1099s should go on your Schedule C. When you attach them, your taxes go up because of self-employment taxes (Social Security and Medicare) which are about 15.3%. When you don't attach them, the software might be putting them somewhere else like "Other Income" which doesn't trigger SE tax. BUT you definitely need to pay SE tax on this income if it's from self-employment, which contract work typically is. The good news is you can deduct 50% of your SE tax on your 1040, and you should be claiming all business expenses which will reduce your taxable income.

Has anyone else noticed that FreeTaxUSA sometimes gives different results from other tax software? I entered the same info in both FreeTaxUSA and TurboTax for my LLC and got different amounts. Not sure which one is right.

I had this exact same confusion last year! The key thing to understand is that FreeTaxUSA's "attach to business" feature is essentially asking whether this income should go on Schedule C (business income) or somewhere else on your return. Since you're doing freelance work through your single-member LLC, those 1099-NECs should definitely be attached to your business and reported on Schedule C - even though they have your SSN instead of your EIN. The IRS treats single-member LLCs as "disregarded entities" by default, so for tax purposes, you and your LLC are the same entity. The big jump in your tax bill when you attach them is because Schedule C income is subject to self-employment tax (15.3% for Social Security and Medicare) in addition to regular income tax. When you don't attach them, the software might be treating it as "other income" that doesn't trigger SE tax - but that would be incorrect for freelance work. Here's what I learned: Yes, you'll pay more in taxes by doing it correctly, BUT you can also deduct all your legitimate business expenses (home office, equipment, software, business meals, etc.) which will significantly reduce that taxable income. Make sure you're claiming every expense you're entitled to - it makes a huge difference!