In 2022, I achieved my dream of becoming a mental health therapist after earning my master’s degree. But I wasn’t ready for the financial reality of being a 1099 independent contractor, which many therapists face. I wasn’t prepared for how little I would make starting out either—I earned about $20,000 in my first eight months of 2022, $64,000 in 2023, and now I’m averaging about $5,100 a month this year. These are all gross amounts, before taxes.
Because of my living expenses, I haven’t been able to set aside enough money for taxes. As a result, I’ve had to arrange a payment plan for each year. I’m currently on a plan for my 2023 taxes and might be able to pay it off by April 2025. But even then, I’d still need to set up a payment plan for 2024, since I can’t afford to pay both last year’s and this year’s taxes at the same time.
I’m currently negotiating my pay or considering leaving the practice I work at, which takes a large percentage of my earnings. But it might take a while before my salary increases enough to cover two years’ worth of taxes at once. I’ve also tried to cut down on living expenses, but there’s only so much I can reduce. Right now, I feel stuck and a bit hopeless about catching up on my taxes. It seems I don’t qualify for an offer in compromise with the IRS because I can’t afford to make estimated payments, which is really frustrating. I’ve looked into W2 jobs in my area, but they all pay the same or less than what I’m making now. As I’m writing this, I’m on hold with the IRS to ask about economic hardship assistance, but I’m not sure if that will help. I’d really appreciate any advice you can offer. Please be kind.
Take on a second job? There’s no real way to avoid paying taxes as a 1099, and it sounds like the one you are having trouble with is FICA, which is around 15%.
I hope,I’ve attempted this before, and it didn’t work out. I can’t take on a second job because I’m already exhausted. 
Hire an accountant, but make sure it’s the right person. See if anyone can recommend someone on your social media accounts. Look for someone who will assist you put things up now for the future and who will also take the time to explain things to you.
They are typically worth the slightly higher cost. The majority of accountants can prepare taxes; the more skilled ones offer advising services.
An additional choice would be a program similar to TurboTax, where you can input expenses and see what kind of support you may expect in terms of taxes, etc.
Not to offend, but only $64,000 for a master’s degree? Presuming you have to reside in an HCL region? Could you find work on something like improved aid so you could work and live somewhere really inexpensive, say in rural America?
It’s clear this situation started off tough and has only gotten more difficult. It’s not easy to face, but my advice is to immediately start saving at least 25% (ideally 30%) of every income you make from 1099 work (or any non-W-2 income) in a separate high-yield savings account. This will help prevent things from spiraling further. In this rare instance, it’s crucial to prioritize planning for the future before tackling present and past issues.
I know this makes it even harder to manage what you already owe. As others have suggested and you mentioned, I hope you’ve been able to secure some sort of payment plan. Even if it’s not ideal, it’s still better than having to pay it all off at once.
Managing your income and expenses is up to you, but the reality is that it comes down to dollars and time.
Best of luck. I hope you’ve managed to get a payment plan that’s low enough to give you some breathing room so you can start setting aside money for taxes moving forward.
Are you referring to a technical perspective?
Because of missing documentation, edge circumstances, and a plethora of additional nuances, integrating with third-party systems such as payment gateways and other APIs may be quite irritating.