I think everyone's overcomplicating this. I've been in this exact situation a few times, and here's what I did: just file the 1099 using "000-00-0000" for now, then later file an amended/corrected 1099 once they get their ITIN. The most important thing is to show you're making the effort to report all payments properly.

I went through this exact situation last year and want to add some practical tips that helped me avoid mistakes. First, document EVERYTHING - keep copies of the W-9 with "Applied For" written in the TIN field, records of when your contractor applied for their ITIN, and all correspondence about the backup withholding. Second, when you start the 24% backup withholding, make sure to issue your contractor a written notice explaining why you're withholding and that it's required by law. This protects both of you if there are questions later. One thing that caught me off guard was that you need to deposit the withheld taxes using Form 8109 or EFTPS just like regular payroll taxes - you can't just hold onto the money until year-end. The IRS expects these deposits on their normal schedule. Also, keep in mind that once your contractor gets their ITIN and provides a corrected W-9, you can stop the backup withholding going forward, but you'll still need to issue the 1099-NEC showing both the total payments and the amount withheld for backup withholding.

Is there any software that specifically helps with optimizing the salary vs dividend split for C Corp owners? I'm using turbotax for business now but it doesn't really give guidance, just calculations after you've already decided.

Great question! You're absolutely right that the double taxation fear is often overblown for small C Corp owners. I've been running my consulting business as a C Corp for 3 years now and the salary deduction works exactly as you described. One thing I learned the hard way though - make sure you're paying payroll taxes on your salary (FICA, unemployment, etc.). Some new C Corp owners forget that even as the owner, you're technically an employee when you pay yourself a salary, so all the normal employment tax obligations apply. Also, don't overlook the benefits of being able to retain earnings in the corporation at the lower corporate tax rates (21% federal) if you're not ready to take distributions yet. Sometimes that's actually better than pass-through taxation depending on your personal tax bracket. The key is really understanding your specific cash flow needs and tax situation rather than just following generic "C Corps have double taxation" advice.

I was in EXACTLY your situation last month. After weeks of stress, I finally broke down and tried taxr.ai after seeing it mentioned here. It actually explained everything that was happening behind the scenes with my return and gave me an accurate timeline. Turns out my return was flagged for a simple discrepancy between what my employer reported and what I filed. Saved me so much anxiety knowing exactly what was happening! https://taxr.ai

I'm going through the exact same thing! Filed March 1st, accepted March 2nd, and my transcript has been completely blank for over a month now. The "as of" date keeps changing but nothing else updates. I've called three times and each agent tells me something different - first it was "normal processing delays," then "possible identity verification needed," and last week they said there was no issue at all and to just keep waiting. It's so frustrating not knowing what's actually happening. At least it sounds like we're not alone in this mess!

I made the switch from TurboTax to FreeTaxUSA two years ago for exactly this reason - they were trying to charge me $59 just for having an HSA! FreeTaxUSA has been fantastic and completely legitimate. The interface is definitely more no-frills compared to TurboTax's flashy design, but it walks you through everything you need and includes all the necessary forms in their free version. I actually prefer it now because there's no constant pestering to upgrade or buy additional services. One thing I really appreciate is their transparent pricing - what you see is what you get. No surprise fees at the end. The $15 state filing fee (if you need it) is clearly stated upfront, unlike TurboTax's habit of revealing costs at the last minute. Your tax situation sounds perfect for FreeTaxUSA's free tier. With just W-2 income, standard deduction, and an HSA, you'll have everything you need without paying a dime for federal filing. I've recommended it to several friends in similar situations and they've all been happy with the switch.

FreeTaxUSA is absolutely legit! I switched from TurboTax last year for the exact same reason - they wanted to charge me $59 just because I had an HSA contribution to report. It felt like such a scam since my taxes are otherwise super simple. I was nervous about making the switch too, but FreeTaxUSA handled my HSA form (8889) perfectly in their free tier. The interface is definitely less polished than TurboTax, but honestly that was kind of refreshing? No constant pop-ups trying to sell me additional services or "maximize my refund" for extra fees. The only real downside is that you'll need to manually enter your info the first year since they can't import from TurboTax, but it's worth the one-time hassle to escape their predatory pricing model. I ended up getting the exact same refund amount and saved myself $59 in the process. Will definitely be using FreeTaxUSA again this year!

Does anyone know if theres special requirements for filing 1120S if you started the scorp mid year? My accountant wants to charge me extra for a "short year return" but im wondering if the software can handle this?

Just wanted to chime in as someone who's been through this exact situation. I started with an S-corp last year and initially tried to find free options but quickly learned that business returns are a whole different beast from personal taxes. After reading through these comments, I think the key takeaway is that while free options don't exist for 1120S filings, there are definitely cost-effective alternatives to paying $800+ to an accountant. The mid-tier software options mentioned here (TaxAct, TaxSlayer) or newer AI-powered solutions seem like reasonable compromises between cost and complexity. One thing I'd add is to make sure whatever software you choose can handle things like shareholder basis calculations and K-1 preparation - these are crucial for S-corps and where a lot of DIY filers mess up. If your business is really simple with just you as the sole shareholder, the learning curve isn't too bad. But if you have multiple shareholders or complex transactions, might be worth biting the bullet on professional help at least for the first year.