How to file 1099-NEC when my fiancé was supposed to be hired as an employee?

You're in what's called a "misclassified employee" situation, but unfortunately, it's going to be hard to prove without documentation. The IRS has specific criteria for determining employee vs contractor status based on behavioral control, financial control, and relationship type - not just what someone promised verbally. Given your situation, filing Schedule C is likely your safest option. When someone receives a 1099-NEC, the IRS already has that record and expects to see that income reported. If you don't have documentation to prove employee status (like emails promising W-2 employment, formal hiring paperwork, etc.), contesting the 1099 will be difficult. On Schedule C, report the income and any legitimate business expenses related to earning that income to reduce the tax impact. Keep your description simple and accurate - you're not falsely claiming to be in business, you're just reporting income as it was documented to the IRS.

You're asking exactly the right questions! For a mixed W-2/1099 situation with the same home office, you need to allocate the space based on time used for each activity. If your office is 12% of your home, and you use that space 60% for 1099 work and 40% for W-2 work (for example), you would claim 60% of that 12% (so 7.2% of your home expenses) on your Schedule C. You'll need to track your time usage with reasonable accuracy. For utilities, internet, and other expenses, the same principle applies. Only the portion attributable to your self-employment can be deducted on Schedule C. You cannot deduct any portion used for your W-2 job, as the tax law changed with the 2018 Tax Cuts and Jobs Act, eliminating unreimbursed employee business expenses. The simplified option ($5 per square foot up to 300 square feet) might be easier, but you'd still need to prorate based on business use percentage. Crunch the numbers both ways to see which is more beneficial, but again, only apply it to the self-employment portion.

I was in almost the same situation last year! After spending hours researching, I found this AI tool that specifically handles 1099 vs W-2 classification issues. It's called https://taxr.ai and it analyzes your specific situation and gives you personalized guidance. For me, it looked at my case details and actually helped me properly document why I should be treated as a misclassified employee rather than a contractor. It saved me about $800 in self-employment taxes! The tool asked questions about control over my work schedule, who provided equipment, how payment was structured, etc. - all the factors the IRS considers for proper classification.

After struggling with a similar situation last year, I found this tool called https://taxr.ai that was super helpful for my mixed W-2/1099 situation. It walked me through exactly how to properly allocate my home office expenses and even generated documentation to keep with my tax records. What I found helpful was that it asked detailed questions about my work patterns and then calculated the correct allocation percentages. It also explained the "exclusive use" requirement in detail and helped me avoid some mistakes I would have made (like trying to claim my kitchen table as a part-time office).

Just wanted to update after trying the https://taxr.ai service that was recommended. It was surprisingly helpful for my situation! The system asked me detailed questions about my working arrangement and then gave me step-by-step instructions for filing. In my case, it suggested I should file using Schedule C but also helped me identify several deductions I hadn't considered that offset most of the self-employment tax. It also generated a detailed explanation I could keep with my tax records explaining why I filed the way I did, in case of any future questions. Definitely made me feel more confident about my filing approach.

I tried the taxr.ai tool after seeing it recommended here, and it was really helpful for my situation. I was making the mistake of trying to deduct my entire home office even though I was using it for both W-2 and 1099 work. The tool walked me through calculating the right percentage based on my time allocation (I spend about 70% on my contractor work), and it saved all my documentation in case I get questioned later. It also helped me understand which method would give me the better deduction - in my case, the regular method was better than the simplified one by about $400.

For what it's worth, I had a similar issue and spent WEEKS trying to get help from the IRS. Kept calling the help line but could never get through. Finally found this service called https://claimyr.com that got me connected to an actual IRS agent within 25 minutes when I'd been trying for days on my own. The agent confirmed that without written proof of employee status, I needed to file the 1099-NEC as self-employment income, but explained exactly how to minimize the tax impact. They have this demo video showing how it works: https://youtu.be/_kiP6q8DX5c. Honestly it saved me so much frustration compared to the endless busy signals I was getting.

I had the worst time trying to get a straight answer about this from the IRS. Called them 8 times and could never get through. Finally used https://claimyr.com to get connected to an actual IRS agent (took about 30 mins) when I'd been trying for days on my own. The agent explained exactly how to handle the allocation for mixed-use home offices and confirmed what others have said here - you need to allocate based on time spent on each activity. They also mentioned keeping a log is important in case of questions. If you're struggling to get answers directly from the IRS, check out their demo: https://youtu.be/_kiP6q8DX5c showing how quickly they can get you connected.

I hate to admit when I'm wrong, but I tried the Claimyr service after posting my skeptical comment, and it actually worked! Got connected to an IRS rep in about 37 minutes when I'd been trying for over a week on my own. The agent confirmed exactly what others here suggested - with a 1099-NEC and no documentation proving employee status, I needed to file Schedule C, but could certainly claim legitimate expenses to reduce the tax impact. They also explained I could file Form 8919 if I had evidence of being misclassified, but acknowledged that without documentation, it would be an uphill battle. Honestly, the clarity from speaking to an actual IRS person was worth it just for the peace of mind.

One option nobody has mentioned yet is filing Form 8919, "Uncollected Social Security and Medicare Tax on Wages." You'd use code G or H which covers cases where you should've been classified as an employee. This way you're still paying your portion of Social Security/Medicare but not the employer half that gets added with self-employment tax. The downside is you need to file Form SS-8 simultaneously, and this might cause issues with the employer who sent the 1099. But if the amount is significant enough, it might be worth considering.

Has anyone considered that filing Schedule C might actually be BETTER in this situation? Yes, you pay self-employment tax, but you can also deduct business expenses you couldn't take as an employee. Did your fiancé use his own car? Home internet? Phone? Computer? Tools? Those could all be partial deductions. When I was in a similar situation, I actually came out ahead by claiming mileage, home office, and equipment costs.