What if you just ask the client to pay expenses directly instead of reimbursing you? I had this problem and started requiring clients to book and pay for travel/hotels themselves and to pay for meals when I'm with them. This way nothing gets reimbursed and nothing extra appears on the 1099. They might actually prefer this since they can use their corporate cards and get points/rewards.

This is such a frustrating situation, and you're absolutely right that you shouldn't be paying taxes on money that was never truly yours. Here's what I've learned from dealing with similar clients: The IRS actually has guidance on this - reimbursements for expenses you paid on behalf of a client should be treated as "advances" or "agency transactions," not as your income. The key is proper documentation showing these were the client's expenses that you temporarily covered. For your Schedule C, report the full 1099 amount as income on line 1, then in Part V (Other Expenses), create a line for "Client expense reimbursements" or "Advances paid on behalf of clients" and deduct the full $725 ($450 travel + $275 meals). Since these weren't YOUR business expenses but rather expenses you paid as the client's agent, they shouldn't be subject to the 50% meal limitation. Make sure you have clear documentation: invoices showing expenses separately from fees, receipts showing you paid on the client's behalf, and any emails/contracts establishing that these were reimbursable client expenses. This creates the paper trail you'd need if ever questioned. I'd also suggest adding language to future contracts clarifying that expense reimbursements are not compensation and shouldn't be included on 1099s. Some clients just don't understand the tax implications of their sloppy accounting practices.

Something similar happened to me and I realized it was because my spouse and I both selected "Married" on our W-4 forms. This can cause underwithholding when both spouses work! You should both check the box that says "Married, but withhold at higher Single rate" or use the new W-4 form's two-earner worksheet.

I completely understand your frustration - the estimated tax system is unnecessarily confusing, especially when you're just starting to navigate it as a young adult! Here's the bottom line: You likely don't need to make quarterly estimated payments at all. Since you both have W-2 jobs, the simplest solution is to adjust your withholding through new W-4 forms with your employers. The key insight is that the IRS doesn't care HOW you pay your taxes throughout the year - whether through paycheck withholding or quarterly estimated payments. They just want to receive enough money as the year progresses. Based on your situation (owing $2000 last year), I'd recommend: 1. Calculate how much extra you need withheld per paycheck ($2000 divided by remaining pay periods) 2. Submit new W-4 forms to both employers requesting this additional withholding 3. This eliminates the need for quarterly payments entirely The "safe harbor" rule mentioned by others is also crucial - if your total withholding this year equals at least what you owed last year ($2000), you won't face penalties even if you still owe at filing time. Don't let the IRS rep's technical jargon intimidate you. This is actually a pretty straightforward fix once you understand your options!

I just want to echo what everyone has said here - this is such a common source of confusion for household employers! I went through the exact same panic last year thinking I was going to double-pay taxes. The consensus here is spot-on: if your payroll service (like QuickPay) is filing quarterly 941s and handling the annual 940, you still need to file Schedule H with your personal return, but you absolutely must check Box 8 to indicate you've already paid the employment taxes through your payroll service. One thing I'd add that helped me feel more confident - I actually requested copies of the 941s that my payroll service filed on my behalf. Most services will provide these if you ask, and it's really helpful to have them in your records. That way you can see exactly what was reported and when, which makes filling out Schedule H much less scary. Also, don't forget to get a detailed year-end summary from QuickPay showing total wages paid, taxes withheld, and employer taxes paid. You'll need these specific figures for Schedule H, and having everything documented properly will save you headaches if the IRS ever has questions. The key is just making sure nothing falls through the cracks - your payroll service handles the quarterly filings, you handle Schedule H (with Box 8 checked), and everybody's happy!

As a tax professional who specializes in household employment, I can confirm everything discussed here is absolutely correct. The confusion between Schedule H and Forms 940/941 is probably the most common question I get from clients with nannies. Here's the definitive breakdown: If your payroll service (QuickPay in your case) files quarterly 941s and annual 940s, you STILL must file Schedule H with your personal tax return. However, you'll check Box 8 on Schedule H Part I to indicate that employment taxes have already been paid through quarterly deposits. This prevents double taxation. The reason you need both is that they serve different purposes - the 940/941 forms handle the actual tax payments and reporting to the government, while Schedule H integrates your household employment into your personal tax return and calculates any additional taxes owed (like the employer portion of Social Security/Medicare if it wasn't fully covered by your quarterly payments). I always recommend my clients request a comprehensive year-end summary from their payroll service that includes: total wages paid, federal income tax withheld, Social Security wages, Medicare wages, and employer taxes paid. You'll need all these figures for Schedule H. One final tip: keep copies of all quarterly payment confirmations from EFTPS and any forms your payroll service files on your behalf. The IRS may request these during an audit, and having organized records will save you significant headaches.

Has anyone considered if the sister could be classified as a household employee instead? If so, you'd need to use Schedule H and possibly W-2 forms instead of 1099s. The IRS has this weird distinction where household workers (including some caregivers) are treated as employees rather than independent contractors.

This is a really important distinction that @Ana Rusula and @Fidel Carson brought up about household employee classification. I'd strongly recommend Oliver double-check this before proceeding with the 1099-NEC. The key test is whether you're controlling HOW and WHEN your sister does the caregiving work. If you're setting her schedule, telling her what specific tasks to do, or she's essentially working under your direction in your grandfather's home, the IRS might consider her a household employee rather than an independent contractor. This matters a lot because: - Household employees get W-2s, not 1099s - You'd be responsible for Social Security/Medicare taxes (employer portion) - You'd need to file Schedule H with your tax return - At $1,300/month ($15,600/year), you're well above the $2,600 threshold On the other hand, if your sister has control over how she provides the care and you're just paying for the result (grandfather being cared for), then 1099-NEC would be appropriate. I'd suggest using one of the tax analysis tools mentioned earlier in this thread to help determine which classification applies to your specific situation. Getting this wrong could result in penalties and back taxes.

I was in your exact situation last year! One thing nobody mentioned yet - if you made over $12,000, you might benefit from setting up an S-Corp in the future. I stayed as a sole proprietor for my first two years but once I hit around $40k in profit, my accountant had me switch to save on self-employment taxes. Not worth it at your current income level but something to consider if your side gig grows. The paperwork and extra requirements are a pain though, so don't rush into it.

Don't stress too much about not having a "registered business" - you're already considered self-employed in the IRS's eyes! Since you made $12,400, you'll definitely want to file Schedule C with your regular tax return. The threshold for requiring Schedule C is just $400 in self-employment income. A few quick tips from someone who went through this exact situation: - Keep ALL records of payments, even Venmo/PayPal transactions - You can deduct software like Adobe Creative Suite, Canva Pro, etc. - If you bought any equipment this year (external monitor, graphics tablet, etc.), those are deductible too - Don't forget about the business use portion of your internet and phone bills Since you made over $400, you'll owe self-employment tax (about 15.3%) plus regular income tax on the profit. I'd recommend setting aside about 25-30% of what you made for taxes to be safe. And definitely start making quarterly estimated payments for 2025 if you plan to continue - it'll save you from a big tax bill next year! The whole process is way less scary than it seems. You've got this!