I just want to say that as someone who prepares 1099s for my small business, the new 1099-NEC form is confusing as hell compared to the old 1099-MISC. I've definitely put info in the wrong boxes before. Your client is probably just confused by the form layout. Definitely ask for a corrected form, but don't assume malice when simple confusion is more likely. The IRS doesn't exactly make these forms user-friendly for small business owners who don't have professional accountants.

I'm a tax preparer and see this exact mistake constantly with the new 1099-NEC forms. Your client almost certainly just put the same amount in both boxes by accident - it's one of the most common errors I encounter. Here's what likely happened: They saw Box 1 for the payment amount, then when they got to Box 7, they either didn't read the label carefully or thought it was asking for the total income amount again. The fact that your federal refund doubled is a red flag that the software is treating Box 7 as state withholding (which it's not on the NEC form). My advice: Don't file until you get a corrected form. The IRS matching system will flag the discrepancy between what you report and what your client reports. Even if you report it correctly on your end, having mismatched documents creates unnecessary headaches. Contact your client ASAP and explain that Box 7 should only have an amount if you performed work in multiple states and they need to allocate the income geographically. If all your work was done in one state (or remotely), Box 7 should be blank. Most small business owners are grateful when you help them avoid IRS issues.

I'm an expat married to a non-US citizen without an SSN, and I've been through this exact process. One thing nobody mentioned is that you can actually go to an IRS Taxpayer Assistance Center in person and they can verify your spouse's documents on the spot! This saved us from having to mail in original documents or find a Certifying Acceptance Agent. You need to call to make an appointment first (this is where Claimyr could help), but it's free and much faster than mailing everything in. Just bring your spouse, their passport, your marriage certificate, and the completed W-7 form.

I'm going through something similar right now! One additional option that might help is to check if your spouse qualifies for an exemption from getting an ITIN. If your spouse is a nonresident alien who doesn't have U.S. source income and won't be claimed as a dependent, you might be able to file as "Married Filing Separately" and treat your spouse as a nonresident alien. This could actually be beneficial tax-wise in some cases, especially if your spouse has no U.S. income. You'd file Form 1040 or 1040-SR and just put "NRA" (Nonresident Alien) in the spouse information section instead of an SSN or ITIN. However, you'll want to double-check this with a tax professional since the rules around resident vs. nonresident status can be pretty complex, especially if your spouse spent any time in the U.S. during the tax year. The substantial presence test and other factors come into play.

Has anyone here used TurboTax Business to file their 1065 with this kind of setup? I've used TT for years but never had to deal with this LLC owns property but personal mortgage situation. Wondering if the software can handle the capital contribution entries correctly or if I need to look at more specialized tax software.

One thing to consider that hasn't been fully addressed - make sure you're tracking the mortgage principal payments correctly in addition to the interest. While mortgage interest is deductible as a rental expense on the 1065, the principal payments are not deductible but should still be recorded as capital contributions to maintain accurate capital accounts. I learned this the hard way when my tax preparer caught that I was only tracking interest payments as contributions. The principal portion increases your basis in the LLC and affects future distributions or sale proceeds. Keep detailed records separating principal vs interest on each payment - your mortgage statements should break this down monthly. Also, if either partner ever stops making their portion of mortgage payments, you'll need to adjust capital accounts accordingly to reflect who's actually contributing what to the LLC.

My company did this to me last year. Turned out they had me listed as living in Nevada (no state income tax) when I actually live in California (big state income tax). Had to pay almost $3k at tax time. Make sure u check ur address on file with HR!!

This is definitely stressful but you're not alone - this happens more often than you'd think! The empty state tax box does mean no state taxes were withheld all year. First thing I'd do is check your final paystub from 2024 to confirm the year-to-date state withholding shows $0.00. A few things to consider: 1) Double-check that your employer has your correct home address on file - sometimes they withhold for the wrong state or no state if there's an address mix-up, 2) Look into whether your state offers any payment plan options if the amount is large, 3) Definitely get this fixed with payroll ASAP for 2025 so you don't face this again. Also worth noting - if this was your employer's error and not something you requested, you might be able to avoid underpayment penalties by explaining the situation to your state tax department. Document everything in case you need to appeal any penalties later!

Be careful about calculating your exact gain! I made a huge mistake when selling my house last year. Your gain isn't just (selling price - purchase price). The actual formula is: Selling price - Selling expenses (realtor fees, etc.) - Purchase price - Purchase expenses (closing costs you paid when buying) - Capital improvements during ownership = Your actual gain I initially thought I had a $280k gain after the exclusion, but after properly accounting for $12k in selling costs, $8k in purchase costs, and about $65k in documented improvements, my taxable gain was only $195k. That saved me thousands in both capital gains tax and NIIT!

Thank you everyone for this incredibly detailed discussion! As someone who's been stressing about this exact situation, this thread has been a goldmine of information. I want to emphasize something that Miguel mentioned about calculating your actual gain - I see so many people (including myself initially) making the mistake of thinking it's just selling price minus what you paid. The reality is that your basis includes not just your original purchase price, but also: - Closing costs when you bought - Major capital improvements (kitchen remodels, new roofs, HVAC systems, etc.) - Selling expenses (realtor commissions, title fees, etc.) I've been keeping a spreadsheet of all my home improvements over the years, but after reading this thread I realized I forgot about my original closing costs from 9 years ago. Just found those documents and it's another $7,200 I can add to my basis! For anyone in a similar situation, I'd strongly recommend gathering ALL your documentation before panicking about the tax implications. Between the $250k/$500k exclusion and properly calculating your actual basis, your taxable gain might be much lower than you initially think. Also planning to try that taxr.ai tool that Giovanni and Dylan mentioned - seems like it could help me organize all this information properly before I meet with my tax preparer.