Your cousin might want to consider proper legal structuring here. Having some properties in personal name and others in an LLC is creating confusion. He might benefit from putting ALL properties into LLCs (maybe separate LLCs for liability purposes) but then having all of those LLCs owned by a holding company that could elect S-Corp taxation. This way, he gets liability protection for all properties, potential self-employment tax savings on the management portion of his activities, and clearer separation between his rental business and handyman service business.

There's another important consideration here that I haven't seen mentioned - the passive activity loss rules. Since your cousin has a handyman business (which generates active income), he needs to be careful about how rental losses interact with his other income. If he's actively managing the rental properties (collecting rent, finding tenants, making management decisions), he might qualify for the $25,000 rental loss deduction against his handyman income, but this phases out at higher income levels. However, if he's paying his handyman business for work on the rentals, this could actually reduce his rental losses and affect this calculation. Also, regarding the LLC properties on Schedule C - this is definitely incorrect as others have mentioned. LLCs are typically disregarded entities for tax purposes unless they elect corporate taxation. The rental income should still go on Schedule E regardless of the LLC structure. One more thing to consider: if he's serious about building the handyman business, he should consider whether having it work primarily on his own properties might hurt his ability to claim it's a legitimate business activity rather than just a hobby or tax avoidance scheme. The IRS looks at factors like profit motive, time spent, expertise, and success in making profits when determining if something is a business.

Does anyone know if the 15% min tax applies to private companies too or just publicly traded ones? My family has ownership in a large private manufacturing business and I'm trying to figure out if this would impact us.

Thanks for all these insights! As someone who works in corporate finance, I wanted to add that companies are also looking at their international structures more carefully now. Since the minimum tax is based on consolidated financial statement income, multinational corporations can't just shift profits to low-tax jurisdictions to avoid it like they could with regular corporate tax. However, there are some nuances around foreign tax credits that create planning opportunities. Companies with significant foreign operations might restructure how they organize their international subsidiaries to optimize the interaction between the minimum tax and foreign tax credit limitations. Also worth noting - the IRS is still working on final regulations for implementation, so some of the finer details are still being hammered out. Companies are having to make strategic decisions based on proposed guidance that could still change.

Is anyone else confused by the Code J in Box 12? I'm going through this exact same situation and my W-2c has a code J but the amount doesn't match what was actually paid to me. From what I can tell reading IRS pub 15-A, code J should show the amount of non-taxable sick pay. Anyone understand what's going on with that?

I just want to add another perspective based on my experience as someone who handles payroll for a small business. Third-party administrators often struggle with sick pay taxation because the rules are complex and depend entirely on who paid the premiums. The key thing to remember is that if you paid 100% of the disability insurance premiums with after-tax dollars, then ALL the sick pay benefits are non-taxable to you. The administrator should never have withheld federal income tax in the first place. What I've seen happen is that many third-party administrators have default settings in their payroll systems that automatically withhold taxes from all payments, regardless of the tax status. They then try to "fix" it later with corrected forms, but often mess up the correction process. For your situation, I'd recommend keeping detailed records of everything - your premium payment receipts showing you paid with after-tax dollars, both W-2 forms, and any correspondence with the administrator. When you file your return, the IRS will see the withholding credit and issue your refund, but having good documentation will help if there are any questions later. Also, consider filing a complaint with your state's insurance commissioner if the third-party administrator continues to provide incorrect tax documents. They have regulatory authority over these companies and can often resolve issues faster than dealing with the company directly.

If you're married, don't forget about filing separately! My spouse makes way more than me, and filing separately let me qualify for Roth contributions based on just my income. The downside is you lose some other tax benefits tho.

Adding to all the great advice here - one strategy that's often overlooked is maximizing your traditional IRA contribution if you're eligible. Even if you have a 401(k) or 457(b) at work, you might still be able to deduct traditional IRA contributions depending on your income level. For 2024, if you're single and your AGI is under $77,000 (or married filing jointly under $123,000), you can get the full $7,000 traditional IRA deduction even with a workplace plan. The deduction phases out at higher incomes but you might still get a partial deduction. This could be the extra AGI reduction you need to get under the Roth limits! Plus, if you end up over the Roth limits anyway, you can always convert that traditional IRA to a Roth later through the backdoor conversion method you mentioned for next year. Just make sure to check the exact income limits for your filing status and whether you qualify for the deduction with your workplace retirement plan.

This is really helpful information everyone! As someone new to self-employment, I was definitely overthinking this. It sounds like the key takeaway is that the 1099-NEC is just a tracking document - I still only report my actual business income once on Schedule C, and that includes everything clients paid me regardless of whether they issued a 1099 or not. The sales tax clarification is huge too. I've been charging sales tax but wasn't sure how it should appear on the 1099-NEC. It's reassuring to know that if a client mistakenly includes sales tax in the 1099 amount, I can offset it as an expense so I'm not paying income tax on money that belongs to the state. Thanks for breaking this down in plain English - much clearer than the IRS publications I was trying to decipher!

Great thread! I'm also new to consulting and have been wrestling with similar 1099-NEC questions. One thing that really helped me understand this better was learning that the 1099-NEC threshold is $600 - meaning clients only have to send you one if they paid you $600 or more during the tax year. But like others mentioned, you still have to report ALL income regardless of whether you get a form. For the sales tax piece, I'd recommend keeping very detailed records of what you collected versus what you actually earned. I create separate line items on my invoices so it's crystal clear what portion is my service fee versus sales tax. This makes it much easier to explain to clients what should go on the 1099-NEC (hint: just the service portion) and helps me track everything correctly for both federal income tax and state sales tax filings. The W-9 form you filled out just gives your client your taxpayer info so they can properly report the payments to the IRS. It's not a tax form you file - it's just paperwork that enables the 1099-NEC process.