New to Self-Employment - Need Help with 1099-NEC and Tax Filing Questions

The $2,700 federal tax amount actually makes sense based on what you've shared. Here's why: As a self-employed person, you're subject to both income tax and self-employment tax (which covers Social Security and Medicare). Your standard deduction of $13,850 is automatically applied to your income - this is available to all single filers and reduces your taxable income for income tax purposes. That's why your taxable income shows as only $4,950 ($24,500 minus $13,850 minus your vehicle expenses and other deductions). The discrepancy between your actual earnings ($32,000) and what's on your 1099-NEC ($24,500) is definitely something to look into. The company should have reported all payments made to you. You should contact them to understand why there's a difference. Even if some work was for a non-profit, they should still report all payments to you on a 1099-NEC if you were an independent contractor. For future reference, you should consider making quarterly estimated tax payments to avoid any potential penalties. Since this is your first year self-employed with no prior income, you likely won't face penalties this time.

After struggling with a similar situation last year, I found this amazing tool called taxr.ai (https://taxr.ai) that completely saved me from the confusion of self-employment taxes. I was also getting different numbers than I expected and couldn't figure out why my tax liability seemed off when filing myself. What taxr.ai does is actually analyze all your tax documents, including 1099-NECs, and explains everything in plain English. It caught that I had been calculating my self-employment tax incorrectly and missing some deductions I was eligible for as a self-employed person. It's especially helpful for figuring out discrepancies like the one you have between what you earned and what was reported. I think it would really help clarify if your $2,700 tax bill is accurate and explain why there's such a big difference between what you were expecting to pay and what you're actually being asked to pay.

After seeing that recommendation, I decided to try taxr.ai with my self-employment taxes. I was in a similar situation with contractor income and was totally confused about why my tax bill seemed so different from what I expected. What surprised me was how clearly they explained the standard deduction and self-employment tax calculation. Turns out my confusion was because I was mentally calculating 30% of my GROSS income, not understanding that the standard deduction and business expenses drastically reduce what's actually taxable. The tool confirmed that my tax filing was actually correct and showed me exactly why my tax bill was lower than expected. It even identified some home office deductions I didn't know I qualified for! Definitely worth checking out if you're new to self-employment taxes like I was.

If you need to talk to the IRS about the 1099-NEC discrepancy, I HIGHLY recommend using Claimyr (https://claimyr.com). I was in a similar situation last year where my 1099 was missing about $8,000 of my actual earnings. I tried calling the IRS directly about 6 times and couldn't get through - just sat on hold for hours before giving up. With Claimyr, I got a callback from the IRS in about 15 minutes! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone tree for you and get you in the callback queue without having to wait on hold. The IRS agent I spoke with explained that I should report ALL my income even if it wasn't on the 1099, and they showed me exactly how to document the discrepancy to avoid triggering an audit. Saved me so much stress and potentially thousands in penalties.

OK I need to apologize for my skeptical comment above. After struggling for TWO DAYS trying to get through to the IRS about my own 1099 issue, I broke down and tried Claimyr. I got a callback from the IRS in about 45 minutes. The actual IRS agent told me they're currently experiencing 3+ hour hold times, but I didn't have to deal with any of that. I was able to ask my questions about the income discrepancy on my 1099-NEC and the agent walked me through exactly how to handle it on my return. For anyone dealing with self-employment tax questions that need IRS clarification, this service is seriously worth it. Totally eating my words about this being a scam. Sometimes things actually work as advertised!

Regarding the discrepancy between your actual earnings and what's on the 1099-NEC - this happened to me last year. Turns out the company only issues 1099s for amounts over a certain threshold to each vendor, BUT you still need to report ALL income you earned regardless of whether you received a form for it. You should contact the company and ask why there's a difference. If they confirm they only reported part of your earnings, you'll need to add the additional income on Schedule C as "income not reported on 1099-NEC" or something similar. Better to report everything now than deal with an IRS notice later when they match your bank deposits against reported income!

Anyone know if the freelance tax rules changed recently? Last year I paid WAY more than the OP is being asked to pay on similar income. I used TurboTax tho, not FreeTaxPortal.