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.

Has anyone had issues with FreeTaxUSA not calculating the correct deduction even after entering both 1098 forms? I did this last year and somehow my deduction was like $2000 less than it should have been. Wondering if there's a glitch or if I missed something.

I went through this exact same situation when I refinanced in August! The key thing that tripped me up initially was making sure I understood the timing correctly. When you have two 1098 forms from the same year due to refinancing, you want to make sure you're not double-counting any interest or missing any deductions. Here's what I learned: 1. The original lender's 1098 will show interest paid from January through the payoff date 2. The new lender's 1098 will show interest from the loan start date through December 3. Any prepaid interest or points from the refinance may be partially deductible in the current year Ryan's advice about using the "Add another mortgage interest statement" feature is spot on. But also double-check that the total interest amounts make sense when you add them up - it should roughly match what you'd expect to pay for the full year on your mortgage amount. One thing to watch out for: if you paid any loan origination fees or discount points on the refinance, those might be spread over the life of the loan for tax purposes rather than fully deductible in year one. FreeTaxUSA should handle this automatically, but it's worth verifying the calculation matches IRS rules.

This is exactly the kind of situation where having clear documentation from the start makes all the difference. I've handled several similar cases where clients filled out their own forms before bringing them to me, and the corrected 2553 approach has worked well every time. One thing I'd emphasize that hasn't been mentioned yet - make sure to keep detailed records of your client's business activities from day one. Bank account opening dates, first transactions, employee records, etc. The IRS may ask for documentation showing the client genuinely intended to operate as an S-corp from the business start date, especially if there's any significant gap between state registration and the original 2553 filing. Also, consider having your client sign an affidavit stating that the incorrect effective date on the original form was an inadvertent error and that they intended S-corp treatment from inception. This can be helpful supporting documentation if the IRS has any questions about the timeline or intent.

Based on all the excellent advice shared here, I wanted to add one more consideration that's been helpful in my practice - timing the submission strategically around IRS processing cycles. If you're filing a corrected 2553, try to avoid submitting during peak filing season (January through April) when processing centers are swamped with individual returns. I've found that submissions made in late spring or early summer tend to get processed more quickly and with fewer follow-up questions. Also, when writing your explanation letter, be very specific about dates. Instead of saying "about a month later," include the exact dates: "The business commenced operations on October 15, 2022, but Form 2553 was inadvertently filed on November 18, 2022, with an effective date of November 18, 2022, rather than the intended effective date of October 15, 2022." The more precise you are with dates and documentation, the less likely you are to get requests for additional information that can delay the process. Good luck with your client's situation - sounds like you're handling it exactly right!

I'm experiencing the exact same situation with my 1040-NR! Filed on February 24th and just got this delayed processing message yesterday. My transcript shows code 570 as well, no 971 notice. I was getting really anxious about it until I found this thread - it's such a relief to see that literally every non-resident filer here is going through the identical process. This is clearly just the IRS's standard additional verification procedure for international returns rather than an indication we made errors on our filings. I've been guilty of checking WMR obsessively multiple times daily (definitely counterproductive for my stress levels!), but seeing everyone's consistent 6-8 week timelines helps me understand that's just adding unnecessary anxiety. I'm definitely switching to the weekly transcript check approach everyone recommends instead of constant WMR refreshing. This community discussion has been infinitely more helpful than anything on the official IRS website - thank you all for sharing your experiences and making this uncertain waiting period feel so much more normal! It's incredible to know we're all navigating the same verification process together.

I'm experiencing the exact same situation with my 1040-NR! Filed on February 27th and just got this delayed processing message today. My transcript shows code 570 as well, no 971 notice. I was honestly getting pretty worried until I found this thread - it's incredibly reassuring to see that literally every non-resident filer here is going through the identical process. This is clearly just the IRS's standard additional verification procedure for international returns rather than an indication we made mistakes on our filings. I've been guilty of checking WMR obsessively several times a day (definitely not helping my anxiety levels!), but reading everyone's consistent 6-8 week timelines helps me understand that's just adding unnecessary stress to an already uncertain situation. I'm definitely going to follow the community advice here and switch to weekly transcript checks instead of constant WMR refreshing. This discussion has been infinitely more helpful than anything I could find on the official IRS website - thank you all for sharing your experiences and making this stressful waiting period feel so much more normal and manageable! It's such a comfort to know we're all navigating the same verification process together.

I went through almost the exact same situation last year! Accidentally sent my entire tax payment (federal + state) to the IRS instead of splitting it. Here's what worked for me: 1. File Form 843 immediately - don't wait. The sooner you submit it, the sooner they can process your refund. 2. Include a detailed explanation letter with your form explaining exactly what happened, including the date of payment, amount, and payment method (pay1040.com in your case). 3. Keep copies of EVERYTHING - your payment confirmation from pay1040.com, bank statements showing the transaction, etc. 4. You can also try calling the IRS at 1-800-829-1040, but be prepared for long hold times. Sometimes they can process overpayment refunds over the phone if it's straightforward. The good news is that this is actually a pretty common mistake, so the IRS is used to handling these situations. I got my overpayment back in about 6 weeks. And definitely pay your state taxes ASAP even if you have to put it on a credit card temporarily - the interest on a card will be way less than state penalties and interest.

I've been through this exact situation! The most important thing is to act quickly on both fronts - getting your IRS refund AND paying your state taxes to avoid penalties. For the IRS overpayment, Form 843 is definitely the right form (not 8849 as someone mentioned earlier). Make sure to include: - Exact payment date and amount - Clear explanation that you accidentally paid state taxes to the IRS - Payment confirmation from pay1040.com - Your contact information Pro tip: You can actually request expedited processing if you're experiencing financial hardship due to the overpayment. Include a brief hardship letter explaining your situation. While you're waiting for the refund (typically 4-8 weeks), definitely pay your state taxes immediately even if you have to borrow the money temporarily. State penalties and interest rates are usually much higher than what you'd pay on a short-term loan or credit card. You can also try calling the IRS Taxpayer Advocate Service at 1-877-777-4778 if you're experiencing significant financial hardship. They sometimes can expedite overpayment refunds in genuine hardship cases. Good luck - this mistake happens more often than you'd think, so the IRS is used to processing these requests!