One thing to consider - if you don't file your taxes with this 1099-NEC income reported, and your family member already submitted it to the IRS, you're gonna get a lovely letter from the IRS eventually asking why the income they know about doesn't match what you reported. Trust me, you don't want that headache!!

The bottom line is you need to report this income since your family member is treating it as payment for services (which it sounds like it was - you mentioned doing "odd jobs" for them). The $8,000 you received is definitely over the $600 threshold that requires a 1099-NEC. Since they've already filed their taxes and issued the 1099, the IRS has a record of this income being paid to your SSN. If you don't report it on your return, you'll get an automated notice from the IRS asking about the discrepancy, and that usually comes with penalties and interest. The good news is that as a contractor, you can deduct legitimate business expenses - things like gas to get to their place, tools you bought for the work, etc. This can significantly reduce what you actually owe in taxes on that $8,000. Don't panic about being behind on filing - the IRS would much rather you file late and pay what you owe than not file at all. You might face some penalties for late filing, but it's way better than ignoring it completely.

I actually did exactly this last year - cashed out at about a 20% loss to pay down debt. The mental relief of getting rid of the credit card debt was honestly worth way more than waiting for my investments to maybe recover someday. Plus the guaranteed "return" of not paying 22% credit card interest beats whatever I might have made in the market. Just my two cents!

Just wanted to add that you should also consider the timing of when you sell within the tax year. Since you're already at a loss, selling before December 31st means you can claim that loss deduction on this year's tax return, which could help offset any other income and potentially get you a bigger refund or lower tax bill. Also, once you pay off that credit card debt, try to resist the urge to rack it up again! The guaranteed savings from eliminating 20%+ interest rates is way better than any potential market gains. You're making a smart financial decision here - sometimes cutting losses and focusing on guaranteed debt reduction is the right move.

Has anyone here done the math on whether it's better to max 401k or do some in 401k and some in a Roth for this income level? I'm trying to figure out the best split now that my income is higher.

Congratulations on your promotion! I went through a similar situation a couple years ago when my income jumped significantly. One thing that really helped me was calculating my estimated effective tax rate vs marginal rate - the effective rate increase isn't as scary as it first seems. With your combined income of $215k, you're right that some will hit the 32% bracket, but your effective rate will still be much lower. At your income level, definitely consider maxing the 401k ($23,000 for 2024) - every dollar you put in saves you 32 cents in taxes on the portion above $182,100. Also worth noting: make sure to update your W-4 with HR soon. The withholding tables might not automatically adjust properly for such a big jump mid-year, and you don't want to be surprised with a big bill next April. The IRS withholding calculator someone mentioned earlier is really helpful for this. One more tip - if you have an HSA option through your health plan, definitely max that out too ($4,300 individual/$8,550 family for 2024). It's the only triple tax advantage account we have!

Something important that hasn't been mentioned yet - if you're planning to refinance before a 1031 exchange, be aware that your debt replacement requirements might be affected. When you do a 1031, you generally need to replace the debt on your relinquished property with at least the same amount of debt on your replacement property (or add more cash to balance it out). If you cash-out refi before selling, you're increasing the debt on the relinquished property, which means you'll need more debt on the replacement property to satisfy the exchange requirements.

Has anyone used a DST (Delaware Statutory Trust) as their replacement property after doing a cash-out refinance on their relinquished property? I'm considering this because DSTs typically come with existing financing that might help satisfy the debt replacement requirements mentioned above.

I'm using H&R Block instead of FreeTaxUSA and don't see this exact question. Is there something similar I should be looking for? Getting my first 1099-NEC this year and don't want to miss anything important.

As someone who's been doing contract work for a few years, I can confirm what others have said - the answer is "Yes" for your situation. This question trips up so many people because it sounds way more complicated than it actually is for most US-based contractors. The "effectively connected" language comes from international tax law, but tax software has to ask everyone. Since you're physically in the US, working for a US company, and receiving a 1099-NEC, your business activity is definitely effectively connected with US trade or business. I remember being terrified of this same question my first year filing as a contractor. The IRS isn't trying to trick you - they just need to know if your business income should be subject to US taxation, which it absolutely should be in your case. You're not going to trigger an audit by answering "Yes" to this question when you're clearly a domestic contractor.