This is such a helpful thread! I'm also a new small business owner and was completely confused about this exact same issue. Based on what everyone is saying, it sounds like the key is to separate the customer refund (which goes on Line 2) from the processing fee refund (which reduces your expenses). I've been making the mistake of only reporting what came out of my pocket rather than the full customer refund amount. This means I've probably been overpaying my taxes! Going to go back and review my records now to make sure I'm doing this correctly going forward. Thanks to everyone who shared their experiences - it's so reassuring to know other small business owners have dealt with the same confusion!

As a tax preparer, I want to emphasize something important that hasn't been fully addressed yet - timing matters! You should report refunds in the same tax year that you originally recorded the sale, not necessarily when you processed the refund. For example, if you made a sale in December 2024 but issued the refund in January 2025, that refund should still be reported on your 2024 Schedule C to properly offset the original sale from that year. This keeps your records accurate and prevents issues if the IRS cross-references your returns. Also, don't forget that if you're using cash basis accounting (which most small businesses do), you need to be consistent about when you recognize both the income and the offsetting refund. Keep good records showing the original sale date and refund date - this documentation will be crucial if you ever face an audit.

Has anyone had experience with audit support from either company? I'm leaning toward FreeTaxUSA but nervous about audit protection...

I made the switch from TurboTax to FreeTaxUSA two years ago and haven't looked back. My situation is pretty standard - W-2 income, mortgage interest, some charitable deductions - and FreeTaxUSA handled everything perfectly. The biggest difference I noticed is that TurboTax holds your hand through every single step with explanations and tips, while FreeTaxUSA assumes you have a basic understanding of tax concepts. If you've been doing your own taxes for a few years, this actually makes FreeTaxUSA faster to use since there's less fluff to click through. The $100+ I save each year by using FreeTaxUSA instead of TurboTax has been totally worth it. Both calculate the same refund amount - I actually ran my numbers through both platforms one year just to double-check. The math is identical, you're just paying extra for the fancier interface and marketing with TurboTax.

Been doing 1099s for years and here's my simple advice: if you don't withhold state taxes (most people don't for contractors), leave Box 6 blank. For Box 7, use your state tax ID number for the state you're filing in. If your contractor works remotely in another state, you might need to file with their state too, using your ID number for that state if you have one. If you don't have a tax ID in their state, some states want you to use your FEIN instead, while others have specific requirements. The tricky part is knowing WHICH states require separate filings. This changes sometimes, and that's the real value of using a service like TaxGenius - they keep track of the requirements for all 50 states so you don't have to.

Just wanted to add my experience as someone who handles 1099-NECs for a medium-sized business with contractors across 12 states. The confusion around Box 6 and Box 7 is totally understandable because these boxes are specifically for state reporting, but they appear on the federal form. Here's what I've learned through trial and error: Box 6 is almost always blank unless you have a specific state withholding arrangement (which is rare for independent contractors). Box 7 gets your state identification number, but here's the key - it's YOUR state ID for the state where YOU'RE filing, not the contractor's state. The real complexity comes when you have contractors in multiple states. You might end up filing the same 1099-NEC information with several different states, each time using your identification number for that specific state (if you have one). Some states want your FEIN if you don't have a state-specific ID. One tip that's saved me headaches: keep a spreadsheet tracking which states require separate filings and what ID numbers they want from you. State requirements change periodically, and what worked last year might not work this year. TaxGenius and similar services are definitely worth the extra cost for the peace of mind - they handle all these nuances automatically.

Hey Andrew! I just went through this exact same process about 4 months ago when launching my first indie game, so I totally understand the confusion. The W-8BEN definitely looks more intimidating than it actually is! Here's what worked for me as an Australian developer: **Key fields to focus on:** - US taxpayer ID: Leave blank (you don't need this as an Australian) - Foreign tax ID: I used my TFN, but you can leave this blank if you're concerned about privacy - both work - Reference number: Leave blank - **Line 9 (most important!)**: Definitely check this box for treaty benefits - reduces withholding from 30% to 5% - Line 10: Leave blank unless claiming special exemptions (which you won't be as a standard developer) **Quick tip:** Double-check that your name on the W-8BEN exactly matches your Apple Developer account - even small differences can cause rejection. Once Apple processes it (usually takes 24-48 hours), the 5% withholding rate applies immediately to all your payments. Made a huge difference to my revenue right from the first payment! The form might seem overwhelming now, but you're literally just a few checkboxes away from getting your game earning money. Congrats on getting so close to launch - that's the exciting part! This tax paperwork is just a small administrative step before you can start seeing the results of all your hard work. You've got this! 🎮

Hey Andrew! I completely understand the confusion - I went through this exact same situation about 8 months ago when I was trying to get my first React Native app published on the App Store. The W-8BEN form definitely seems way more complicated than it needs to be! Here's what I learned after doing a ton of research and finally getting it right: **The basics for Australian developers:** - **US taxpayer ID field**: Leave this completely blank - we don't need an ITIN or SSN for app royalties - **Foreign tax ID**: This is optional - you can use your TFN or ABN if you have one, but many Aussies leave it blank for privacy and it still gets accepted - **Reference number**: Always leave blank for individual developers - **Line 9 (crucial!)**: Definitely check this box to claim treaty benefits - this reduces your withholding from 30% down to just 5% - **Line 10**: Leave blank unless you're claiming special rate reductions beyond the standard treaty (which you won't be) The most important thing is getting that Line 9 checked - without it, Apple will withhold 30% of your earnings instead of 5%. That's a huge difference when you're trying to make money from your game! One thing that tripped me up initially was making sure my name on the W-8BEN exactly matched what I used on my Apple Developer account. Even small differences like middle names or abbreviations can cause rejection. Apple usually processes the form within 24-48 hours, and the reduced tax rate applies immediately to your first payment. It's such a relief when you see that 5% rate show up instead of 30%! Don't let this tax form delay your launch - you're so close to getting your game out there! The hardest part (actually building the game) is already done. This is just paperwork standing between you and your first mobile game success! 🎮 Good luck with the launch!

I'm dealing with the exact same situation - 3/22 DDD to my Serve card and nothing yet! This is also my first year filing and I was starting to really worry. Reading through everyone's experiences here has been incredibly helpful though. It sounds like Serve consistently takes 1-4 business days after the DDD to actually post IRS refunds, which is way longer than I expected. I had no idea they don't show pending deposits either - I've been staring at my account balance thinking something was wrong! The fact that so many people here have gone through this same waiting period with Serve and eventually received their refunds is really reassuring. I'm going to follow the advice about setting up SMS alerts instead of constantly checking the app. Thanks Justin for posting this - it's good to know we're all in the same boat! Hopefully we'll all see our deposits by Wednesday.

Hey Justin! I completely feel your anxiety - my first refund had me checking my account every few minutes too! I've been using Serve for tax refunds for the past two years, and here's what I've learned: that 3/22 DDD just means the IRS sent your money on Friday, but Serve's internal processing usually takes 2-4 business days after that. Since it was released Friday, I'd realistically expect to see it Tuesday through Thursday this week. The most important thing to remember is that Serve NEVER shows pending IRS deposits - it literally goes from nothing to the full amount appearing instantly when they finish processing. I made myself crazy my first year constantly refreshing the app! My advice: set up SMS deposit alerts in your Serve account settings and then try to distract yourself. Your refund is definitely coming - I've never seen a properly issued refund get lost with Serve, they're just slower than traditional banks. Hang in there!