How can I avoid paying tax on my 1099-NEC with only 6k AGI from internship?

You're dealing with the difference between W-2 employment (where taxes are withheld) and 1099-NEC income (where you're treated as self-employed with no withholding). Even with a low overall income, self-employment income is subject to self-employment tax of 15.3% to cover Social Security and Medicare - that's likely where most of that $500 is coming from. The good news is you may be able to reduce what you owe. Since this was a 1099-NEC job, you can deduct business expenses on Schedule C. Did you use your own computer, buy supplies, drive your car for work purposes, or have any other expenses related to the internship? These can all reduce your taxable income. Also, check if you qualify for the Earned Income Tax Credit, which could significantly reduce your tax bill or even result in a refund. The American Opportunity Tax Credit might also help if you're in college.

After struggling with a similar situation (had a side gig that gave me a 1099), I found this amazing tool called taxr.ai (https://taxr.ai) that saved me so much hassle. It analyzed my situation and found deductions I had no idea I could claim as a 1099 contractor. The tool asked me questions about my home setup, equipment I used, and even identified that part of my cell phone bill could be deducted since I used it for work calls. It walked me through calculating a home office deduction too, which I was totally clueless about before.

I was super skeptical about taxr.ai when I first saw it mentioned here (I'm always wary of random tools people recommend), but I was desperate because I owed almost $700 on a small design gig I did. I finally gave it a try and holy crap - it found enough legitimate deductions to cut my tax bill in half! It pointed out that I could deduct part of my Adobe subscription, some equipment I bought, and even a percentage of my internet bill. The interface walked me through everything step by step and explained WHY each deduction was legitimate. Totally worth checking out if you're dealing with 1099 income.

If you've already tried everything to reduce your tax bill and still need to pay, you might want to set up a payment plan with the IRS. I was in a similar situation last year and couldn't get through to anyone at the IRS to discuss options - kept getting disconnected after waiting for hours. I ended up using Claimyr (https://claimyr.com) and it was a total game changer. They got me connected to an actual IRS rep in about 20 minutes when I'd been trying for days on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent helped me set up a payment plan that was only $50/month, which was way more manageable than paying the lump sum I owed. They can be surprisingly flexible if you actually get to talk to a human.

I need to eat my words from my previous comment. After trying for THREE DAYS to reach someone at the IRS about setting up a payment plan for my taxes, I finally broke down and tried Claimyr. I was totally convinced it was a scam, but I was desperate. Got a call back in 15 minutes with an actual IRS agent on the line! They helped me set up a payment plan that works with my budget. I was legitimately shocked that it worked. Saved me hours of frustration and probably helped me avoid late payment penalties too since I was running out of time to make arrangements. Sometimes being proven wrong is actually a good thing!

As a college student, did you check if your parents are claiming you as a dependent? That affects what credits and deductions you're eligible for. If they're not claiming you, make sure you claim yourself. Also, double check if you qualify for education credits like the American Opportunity Credit - that's worth up to $2,500 and could potentially wipe out what you owe and even get you a refund.

Don't forget about the retirement savers credit! If you put ANY money into an IRA or 401k, with your income level you'd qualify for a 50% credit on up to $2,000 contributed. Even if you haven't contributed yet, you can still open and fund an IRA for 2023 until the tax filing deadline!

This is exactly why understanding the difference between employee and contractor status is so important! Since you received a 1099-NEC, you're considered self-employed for tax purposes, which means you're responsible for both the employee AND employer portions of Social Security and Medicare taxes (that's the 15.3% self-employment tax everyone's mentioning). However, you have several good options to reduce or eliminate what you owe: 1. **Business deductions on Schedule C** - Any legitimate expenses for your internship (computer usage, internet, supplies, transportation, etc.) 2. **Education credits** - The American Opportunity Tax Credit could be huge for you as a college student 3. **Retirement savings credit** - As Emma mentioned, contributing to an IRA could give you a 50% credit at your income level 4. **Earned Income Tax Credit** - You might qualify for this as well The key is that while you can't avoid the self-employment tax entirely if you have net earnings over $400, these credits and deductions can significantly reduce your overall tax bill. Start with gathering documentation for any internship-related expenses and your 1098-T form from school. Those two things alone might solve your problem!