How should I report $850 from independent contractor phone work for tax purposes?

So I did some independent contractor phone work back in summer 2021 and made about $850. The company still has my earnings in my account because I haven't provided my SSN yet, so they haven't sent me a check or any tax forms. I haven't withdrawn the money. My parents are handling my taxes this year (for the last time), and I'm thinking of just leaving that money sitting in the account until next year when I'll be doing my own taxes. I have a regular full-time job where I make around $94k annually, so this is just a small side gig amount. What does this mean for my taxes? When I eventually withdraw the money, how should I handle reporting it? I think I'm considered an independent contractor but I'm not totally sure about the tax implications. Should I wait until next year to deal with it or is that a bad idea?

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18 comments

Jamal Wilson

•8M

The tax obligation is created when you earn income, not when you withdraw it. Even though you haven't taken the money out yet, you technically earned that $850 in 2021, so it should be reported on your 2021 tax return. Since you're an independent contractor, the company would normally issue you a 1099-NEC if you earned $600 or more (which you did). However, since you haven't provided your SSN, they can't issue this form. This doesn't exempt you from reporting the income though. You should report this as self-employment income on Schedule C, and you'll likely owe self-employment tax (15.3%) plus regular income tax on this amount. Waiting until next year doesn't change the fact that it was 2021 income, and technically you'd be filing an incorrect return if you don't report it now.

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Jamal Wilson

•8M

No, that's not how tax law works. Income is taxable when it's earned or when you have a legal right to it, not when you physically receive it. This is called "constructive receipt" in tax terms. Even without a 1099, taxpayers are legally obligated to report all income regardless of whether it's documented on tax forms. The IRS doesn't need to "know about it" for it to be legally required to be reported. Intentionally failing to report income you've earned is tax evasion, which can carry significant penalties if discovered.

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Liam Fitzgerald

•8M

I had a similar situation where I did some freelance work and the company was holding my payments until I submitted paperwork. I found this amazing tool called taxr.ai (https://taxr.ai) that really helped me figure out my independent contractor situation. They analyzed my exact scenario and clarified that income is taxable when earned, not when paid - even if the company hasn't sent a 1099. The tool explained how to report the income on Schedule C and calculate self-employment taxes properly. It even created a personalized report explaining all my tax obligations that I could share with my parents since they were doing my taxes. Definitely saved me from making a mistake that could have triggered an audit later!

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Liam Fitzgerald

•8M

It analyzes your specific tax situation and gives personalized recommendations based on tax code. It's not just general advice - it breaks down exactly which forms you need and how to complete them for your particular circumstance. The difference from TurboTax is that it's focused on explaining tax situations and requirements, not just walking you through form submission. It's more like having a tax expert analyze your situation and explain everything in plain English. And while "report income when earned" sounds simple, how you report it (Schedule C vs other forms) and what deductions you qualify for can be complex, especially for contractor income.

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Amara Nnamani

•8M

Okay so I was skeptical but I checked out taxr.ai and it actually saved my butt. I had a similar contractor income situation and wasn't sure how to report it. The tool flagged that I needed to file Schedule C even though I hadn't received a 1099 yet, and showed me exactly which expenses I could deduct against that income to lower my tax burden. The most helpful part was that it explained the self-employment tax calculation which I had no clue about. Ended up saving about $200 in deductions I wouldn't have known I qualified for. My situation was different from yours but definitely worth checking out if you're confused about contractor taxes.

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Giovanni Mancini

•8M

If your parents are doing your taxes and you're worried about explaining this income source to them, you might want to try calling the IRS to get specific guidance. Of course, we all know how impossible it is to actually reach a human at the IRS - I spent HOURS on hold last year. That's when I discovered https://claimyr.com - they have this service where they actually wait on hold with the IRS for you and then call you when they get a real person on the line. I was super skeptical but you can see how it works here: https://youtu.be/_kiP6q8DX5c I used it to get clarification on some independent contractor income I had, and they connected me with an IRS agent in about 25 minutes (versus the 2+ hour hold time I experienced trying myself). The agent gave me the exact guidance I needed for my situation.

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Giovanni Mancini

•8M

They use an automated system that waits on hold for you. When they reach a live IRS agent, their system calls your phone and connects you directly to that agent. They don't "skip the line" - they just wait in it for you so you don't have to sit there listening to hold music for hours. The value isn't getting to the front of any line - it's not having to waste your time being on hold. They just notify you when it's your turn to talk to someone. It's like those restaurant pagers that buzz when your table is ready, except for phone calls.

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Dylan Cooper

•8M

Ok I'm eating my words here. After waiting on hold with the IRS for nearly 3 hours trying to get answers about my independent contractor situation (and getting disconnected TWICE), I broke down and tried the Claimyr service. They called me back in about 40 minutes with an actual IRS representative on the line. Got my questions answered about how to report income when you haven't received payment yet. The agent confirmed I needed to report it in the tax year it was earned even without a 1099. For what it's worth, the IRS rep also mentioned that if the company is holding your money because you haven't provided your SSN, they're actually required to withhold 24% backup withholding, so you might want to check with the company about that.

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Sofia Morales

•8M

You would still report it on Schedule C as self-employment income if you're an independent contractor, even without a 1099. There's no requirement that you need a 1099 form to file Schedule C - it's based on the nature of your work, not whether you received a form. In the tax software, you typically just enter it as "income not reported on a 1099" or something similar. The IRS doesn't care whether you got the form or not - they care that you report all income. The forms are just a verification system, but the obligation to report exists regardless.

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