Does this work with the basic version of QuickBooks or do I need the higher tier plans? I've been considering switching from my spreadsheet system but don't want to pay for features I won't use.

The basic QuickBooks Self-Employed version does have this functionality, though it's somewhat limited. The QuickBooks Simple Start plan works better if you have multiple contractors since it gives you more detailed reports and tracking options. If you're just tracking a few contractors, the Self-Employed version should be sufficient. But if you have numerous contractors or need more comprehensive reporting for your business, the higher tier plans definitely make things easier with features like automatic 1099 preparation and filing.

Not exactly. The contractor records the full $1350 as gross income (matching the 1099), but then they get to deduct the $41 PayPal fee as a business expense on their Schedule C. This reduces their net income to $1309, which is what they'll actually be taxed on.

Is there any way to request that schools change how they report this? It seems fundamentally unfair that the reporting method can cause students to lose out on significant tax credits just because of when payments happen to be processed.

Unfortunately, schools don't have much flexibility here. The IRS mandates the reporting methods, and schools must follow them. Prior to 2018, schools could choose between reporting amounts billed or payments received, but now most are required to use the payments received method. What students can do is plan their payments strategically if possible. For example, if you know you're graduating in Spring, sometimes delaying that final tuition payment until January (of your graduation year) can help align the reporting with when you'll receive and use your education. However, this depends on your school's payment deadlines and late fee policies.

I had the same problem with TurboTax! I ended up switching to FreeTaxUSA which let me enter my actual qualified education expenses separate from what was on the 1098-T. You have to include an explanation statement, but at least it allowed me to claim the full credits I was entitled to.

Thanks for the suggestion! I just tried FreeTaxUSA and it definitely gives more flexibility. It asks for what's on the 1098-T but then has separate entries for "actual qualified expenses paid" where you can enter the correct amounts. Much better approach than the other software I tried.

Thanks for the accounting perspective! Would it be worth asking them directly if they plan to issue a 1099 for this reimbursement? Or is there specific language I should use when I submit the W9 to make it clear this shouldn't be treated as income?

Yes, it would definitely be worth asking them directly if they plan to issue a 1099 for the reimbursement. A simple email saying "I'm submitting the W-9 as requested, but want to confirm you won't be issuing a 1099 for this payment since it's a reimbursement for expenses I incurred due to construction issues, not income" should do the trick. As for specific language when submitting the W-9, I'd attach a brief cover letter stating: "This W-9 is being provided solely for your vendor setup requirements. The $750 payment represents reimbursement for mold testing expenses I incurred as a result of construction defects, not payment for services or taxable income. Please ensure this is properly coded in your accounting system as an expense reimbursement to prevent incorrect 1099 reporting." That clearly documents your position if there are any questions later.

Bad advice. If a company asks for a W-9, refusing to provide it could cause them to withhold payment entirely or potentially subject you to backup withholding at 24%. Much better to provide the W-9 with a clear explanation that this is a reimbursement, not taxable income.

I used FreeTaxUSA Pro last season and it was decent for basic returns. The interface isn't as polished as the big names but it gets the job done. State returns are extra though, like $15 each.

Good point! I wasn't planning to charge anything since I'm just getting experience, but I'll look into getting a PTIN anyway to do things properly.

Your gig work from Uber and DoorDash shouldn't go on Line 1h. That income is considered self-employment income and should continue to be reported on Schedule C. The "Other earned income" on Line 1h is generally for earnings that are treated as wages but don't fit in the other categories. As a self-employed gig worker, you'll still report your income and expenses on Schedule C, calculate your net profit or loss, and then that flows to Schedule 1 and ultimately to Form 1040. These changes to Line 1 don't change the fundamental way gig workers report their income.

Tax software companies update their programs every year based on IRS changes. TurboTax, H&R Block, and other major tax software should have all the new form changes implemented before filing season begins. They usually start updating their systems as soon as the IRS finalizes the forms.