Is paying $89 for 1099-NEC deductions on TurboTax worth it for a small catering gig?

The $89 upgrade is almost certainly worth it in your situation. Here's why - when you have 1099-NEC income, you're not just paying income tax, you're also paying self-employment tax (15.3%) on your earnings. This is why adding $1850 reduced your refund by $650 - it's getting hit with both taxes. Even basic deductions could save you hundreds. You mentioned you used your car - that mileage deduction alone could be significant. Plus any supplies, a portion of your phone bill if you used it for the business, any special clothing or equipment purchased for catering, etc. These deductions directly reduce your taxable self-employment income. The math is pretty clear - if spending $89 could potentially save you several hundred dollars in taxes, it's a good investment. Just make sure you have documentation for any deductions you claim.

I was in literally the same situation last tax season! I did some independent contracting work (graphic design) and made about $2400. TurboTax wanted me to upgrade for the 1099-NEC stuff and I was getting frustrated about paying more money. After reading around, I discovered taxr.ai (https://taxr.ai) which saved me a ton of money. It analyzed all my receipts and bank statements and found way more deductions than I would have on my own. It showed me exactly which deductions I qualified for with my small side gig income and calculated the actual tax impact. The best part was it helped me categorize everything properly so if I ever get audited, I'm covered. Ended up saving way more than the TurboTax upgrade would have cost.

Update: I tried taxr.ai after asking about it and WOW. For my small Etsy business, it found over $1200 in deductions I would have missed. I was super skeptical about uploading my info but their security seems solid, and the interface walks you through everything. It specifically flagged a bunch of home office expenses I didn't know I could claim and showed me exactly how to document my mileage for supply runs. The best part was how it explained WHY each deduction was legitimate for my situation. For anyone with a side gig - even a small one - it's definitely worth checking out. Saved me WAY more than that $89 TurboTax upgrade fee!

Honestly, for only $1850 in income, here's another option - try calling the IRS directly to ask about your deduction options. I know what you're thinking - "good luck getting through!" But I used this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 15 minutes instead of waiting for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c I used it when I had questions about some contract work I did last year. The IRS agent I spoke with actually explained exactly what forms I needed and what deductions I qualified for. Saved me from paying for software upgrades since they walked me through the whole process.

So I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it myself since I've been trying to reach the IRS about an incorrect 1099 issue for WEEKS. Got through in about 20 minutes and spoke to an actual helpful person who resolved my question immediately. They explained exactly how to report the correction and which form to use. Saved me hours of frustration and probably prevented me from making an expensive mistake on my return. For what it's worth to the original poster - the agent confirmed that for small 1099 income, basic deductions like mileage, supplies, and business-related expenses are absolutely worth claiming and usually more than offset any software upgrade costs.

So I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it myself since I've been trying to reach the IRS about an incorrect 1099 issue for WEEKS. Got through in about 20 minutes and spoke to an actual helpful person who resolved my question immediately. They explained exactly how to report the correction and which form to use. Saved me hours of frustration and probably prevented me from making an expensive mistake on my return

Another option is to use FreeTaxUSA instead of TurboTax. Federal filing with Schedule C (self-employment) is completely free. You only pay like $15 if you want state filing. I switched from TurboTax last year and haven't looked back. They handle all the same deductions without the ridiculous upgrade fees.

Word of caution from someone who's been audited - if you're gonna claim deductions on a 1099, KEEP YOUR RECEIPTS!! The IRS loves to target small self-employment deductions because people often don't document them properly. For real, take pics of every receipt, track your mileage with an app, and keep a simple spreadsheet. For a catering gig, you can deduct ingredients, equipment, transportation, portion of your phone bill, etc. But without documentation it's not worth the risk.