Just wanted to throw in my experience. Last year I messed up and left line 32 blank on my Schedule C because I didn't understand it. Got a letter from the IRS about 3 months later asking me to clarify. Wasn't a big deal - just had to respond saying "Yes" all investments were at risk (since I just had a simple freelance writing business with my laptop and some software). But it delayed my refund by about 6 weeks, so definitely worth just answering it correctly the first time!

Thanks for asking this question - I was literally stuck on the same line yesterday! After reading through all these responses, I'm feeling much more confident. I have a small graphic design business and invested about $2,500 in software licenses and equipment. Based on what everyone's saying, it sounds like "Yes" is definitely the right answer since I could potentially lose that money if my business doesn't work out. Really appreciate everyone sharing their experiences - it's so much clearer than the official IRS instructions. Going to mark "Yes" and finally submit this thing!

As a tax professional who's been dealing with 1099-NEC forms since they were introduced, I can confirm this is absolutely a mistake on your client's part. Box 7 on the 1099-NEC is specifically for "State income" - meaning if you performed work in multiple states and they need to allocate how much of your total compensation relates to each state. The fact that they put the same amount in both Box 1 and Box 7 tells me they either didn't understand what Box 7 was for, or they thought it was asking for total income again. This is incredibly common - I see it at least 5-10 times every tax season. Your tax software doubled your federal refund because it's incorrectly treating the Box 7 amount as if it were state tax withholding (which would be reported in Box 5, not Box 7). Since you received the full amount shown in Box 1, there clearly wasn't any actual withholding. Don't file with the incorrect form. Contact your client immediately and explain that Box 7 should be blank unless you worked in multiple states. Most business owners are actually grateful when you help them avoid potential IRS issues. Get the corrected 1099-NEC first, then file - it'll save you potential headaches down the road when the IRS tries to match up the documents.

I'm dealing with a very similar situation right now! My client also put the same amount in both Box 1 and Box 7 on my 1099-NEC, and like you, I received the full amount shown in Box 1 with no deductions whatsoever. After reading through all these responses, I'm convinced this is just a common mistake that happens when business owners aren't familiar with the new 1099-NEC form layout. The fact that multiple tax professionals here are saying they see this 5-10 times per season really puts my mind at ease. What I found most helpful from this thread is understanding that Box 7 is specifically for state income allocation when you work across multiple states - not for any kind of withholding. Since all my work for this client was done remotely from my home state, Box 7 should definitely be blank. I'm going to follow the advice here and contact my client today to request a corrected form before filing. Better to be proactive about this than deal with IRS matching issues later. Thanks everyone for sharing your experiences - this community is incredibly helpful for navigating these confusing tax situations!

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.

This is such a helpful thread! I'm actually going through the exact same situation right now. Based on all the discussion here, it sounds like the consensus is that FSA limits are indeed per employer, but many HR departments don't realize this or have internal policies that override it. I'm planning to approach my new employer's HR with the IRC Section 125(i) reference and IRS Information Letter 2016-0077 that several people mentioned. It's frustrating that something this important isn't clearly spelled out in the main IRS publications, but at least now I have the right citations to make my case. One question I have - for those who successfully convinced their HR departments to allow the full contribution, did you face any pushback during tax season or audits? I want to make sure I'm not setting myself up for problems down the road, even if the IRS technically allows it.

I'm dealing with this exact situation right now and wanted to share what I found after doing extensive research. The confusion seems to stem from the fact that while the IRS allows separate FSA limits per employer, many payroll systems and HR departments aren't set up to handle this properly. I ended up contacting my tax attorney who confirmed that FSA contribution limits are indeed per Section 125 Cafeteria Plan, which means per employer. The key insight is that the $3,200 limit (for 2024) is placed on what each employer can allow you to contribute through their plan, not on your total annual contributions across all employers. However, there's a practical consideration here - make sure you can actually use all the FSA money. I learned this the hard way when I had to scramble to spend down $1,800 before year-end after switching jobs mid-year. The "use it or lose it" rule doesn't care how many employers you had. For anyone trying to convince their HR department, I found that referencing Treasury Regulation 1.125-5 alongside IRC Section 125(i) was most effective. It clearly states that each employer's cafeteria plan is separate and subject to its own limits. Good luck!

Don't forget about state tax departments too! I had a similar situation and my state's department of revenue was actually way more helpful than the IRS. They had copies of all my W2s for the past 5 years and were able to mail them to me after I verified my identity. Worth checking if your state offers something similar!

For anyone still dealing with this, I wanted to share what worked for me after being in a very similar situation. I hadn't filed for 6 years and was completely overwhelmed trying to piece everything together. Here's what I learned: You actually don't need the original W2s to file your back taxes. The IRS wage and income transcripts contain all the essential information - employer name (even if partially masked), wages, federal income tax withheld, Social Security wages, etc. A tax professional can work with just this information to prepare your returns. The key is to focus on getting your transcripts for each year you need to file, then either use tax software that accepts transcript data or work with a CPA who handles unfiled returns regularly. Many tax pros are experienced with exactly this situation and can interpret those encrypted EINs better than you'd expect. Also, don't panic about penalties - the IRS is often willing to work with people who are genuinely trying to get compliant, especially if you're owed refunds for some of those years. The sooner you start filing, the better your situation becomes. You've got this!