I've been through this exact situation and can share some reassurance based on my experience. The key distinction here is that unemployment overpayments are considered state debts, not federal debts. The Treasury Offset Program primarily handles federal obligations like student loans, federal tax debts, and child support - but unemployment overpayments typically don't qualify for federal tax refund interception unless your specific state has entered into a special agreement with the Treasury Department (which most haven't due to administrative costs). Since your state department explicitly told you "only state taxes will be intercepted" and you're not seeing any offset indicators on your IRS account, that's a very good sign. I'd recommend doing one final check of your IRS transcript about a week before your expected refund date - look specifically for codes 896, 898, or 971 which would indicate pending offsets. If those aren't there, you can feel confident your federal refund is safe while planning for your state refund to be intercepted as they indicated. The systems really are separate for this type of debt collection, so trust what you're being told by the state agency in this case.

I've been in a very similar situation and wanted to share my experience to hopefully ease your worries. Last year I had an unemployment overpayment from 2021 that had me stressed about my federal refund too. After weeks of anxiety, I finally got definitive answers by checking multiple sources: 1. Called the IRS and specifically asked about Treasury Offset Program (TOP) holds - they confirmed none were showing 2. Checked my IRS account transcript for offset codes (896, 898, 971) - nothing there 3. Verified on the Treasury Offset Program website (fiscal.treasury.gov/top/) - no pending offsets My federal refund came through exactly as expected, while my state refund was intercepted as the unemployment office had warned. The key thing that helped me understand was learning that unemployment overpayments are state-level debts, and most states don't participate in the federal offset program because of the administrative burden and costs involved. Since your state specifically told you only state taxes would be affected and you're not seeing offset indicators, you can likely trust what they're telling you. The anxiety is totally understandable when you're counting on that money, but based on everything you've described, your federal refund should be safe. Just do one final transcript check about a week before your expected deposit date for complete peace of mind!

This entire discussion has been absolutely phenomenal for someone like me who's just starting to handle US tax compliance! As a newcomer to this field, I was completely overwhelmed by the W-9 requirements, but this thread has provided such clear, actionable guidance. I particularly appreciated the clarification that you should collect W-9s from EVERYONE first, then worry about who actually needs 1099s later based on entity type and payment method. That simple approach takes away a lot of the initial confusion about trying to figure out all the exceptions upfront. The practical tips about validation (checking TIN formats immediately), timing (quarterly reviews instead of year-end scrambles), and relationship management (clear communication protocols with clients) are exactly what someone new needs to avoid common pitfalls. As an international bookkeeper trying to serve US clients professionally, I'm definitely going to investigate the automation tools mentioned here - TaxR.ai for handling the complex exceptions and Claimyr for direct IRS guidance when needed. Given all the nuances discussed (attorney exceptions, entity classifications, payment method rules, backup withholding), having technology help catch details I might miss while learning seems like a smart investment. Thank you to everyone who shared their hard-earned experience! This thread is going to be my reference guide as I build my expertise in US tax compliance requirements.

As someone who has been handling cross-border bookkeeping for several years, I want to emphasize how important it is to establish these W-9 processes early in your client relationships. The confusion you're experiencing is completely normal - US tax compliance can be overwhelming even for experienced bookkeepers! One thing I've learned that might help: create a simple decision tree for yourself. Start with "Is this a US vendor?" If yes, collect W-9. If no, collect appropriate W-8 form. Then worry about the 1099 requirements later based on entity type, payment amounts, and payment methods. The advice in this thread about automation tools like TaxR.ai sounds promising, especially for catching those tricky exceptions like the attorney rule that even experienced professionals sometimes miss. When you're dealing with multiple clients across different jurisdictions, having technology help ensure compliance can be invaluable. Don't let the complexity discourage you - start with the basics (collect all the forms) and build your knowledge over time. Your Canadian perspective can actually be valuable to US clients who need someone who understands cross-border requirements. Good luck with getting this sorted out for your client!

I've been through this exact situation with FreeTaxUSA! Don't panic - what you're describing sounds like a classic pre-authorization hold rather than an actual charge. Here's what likely happened: When you selected the "pay with refund" option, FreeTaxUSA placed an authorization hold on your payment method to verify it's valid, but since you never clicked the final "FILE" button, your return wasn't actually submitted and the payment shouldn't process. Quick steps to resolve this: 1. Log back into your FreeTaxUSA account and check your return status - it should show "In Progress" or "Draft" if you didn't file 2. Call their customer service at 801-717-1040 and explain you didn't complete filing but see a charge 3. Check with your bank if the charge shows as "pending" vs "posted" - pending authorization holds typically drop off in 2-5 business days I had this same thing happen last year and the hold disappeared after 3 days once I confirmed with FreeTaxUSA that my return wasn't filed. Their customer service was actually helpful in explaining that the authorization doesn't become a real charge unless you complete the filing process. You still have time before the deadline to either complete your FreeTaxUSA return or switch to another service if you prefer. Just don't file duplicate returns!

I'm glad to see you got some clarity on your situation! As someone who's dealt with similar tax software confusion, I just wanted to add a couple of quick points that might help you and others in this thread: When you do call FreeTaxUSA customer service tomorrow, ask them to send you an email confirmation stating that your return wasn't filed and that they're releasing the authorization hold. Having this in writing can be really helpful if there are any lingering issues with your bank or if you need to reference it later. Also, since you mentioned you're eligible for state free-file, you might want to double-check if you actually need to pay the state filing fee with FreeTaxUSA. Some states have their own free filing options that might save you that $15 charge entirely. You can check the IRS Free File website to see if your state offers direct free filing. The good news is that this kind of authorization hold mix-up is pretty common with online tax services, and it almost always gets resolved quickly once you contact customer support. You're definitely not the first person to get confused by their payment flow - their interface could be clearer about when charges actually process versus when they're just authorizing your payment method. Sounds like you're on the right track to get this sorted out well before the deadline!

As someone who's been through this exact situation, I'd recommend getting organized now for next year's tax filing. Beyond just reporting the $1200 win, make sure you understand your state's rules too - some states have different thresholds or treatment for gambling winnings. One practical tip: if you're planning to gamble more this year, consider setting up a separate bank account just for gambling transactions. Deposit your gambling budget there and only use that account for casino/gambling expenses. This creates a clear paper trail that makes tracking wins and losses much easier come tax time. Also, don't forget that even smaller wins under $1200 are still technically taxable income - the casino just isn't required to issue a W-2G or withhold taxes. If you have a lucky streak with multiple smaller wins that add up, you're supposed to report those too. Most people don't realize this! The good news is that $1200 is a nice win but shouldn't create a huge tax burden. Just budget for it and enjoy the extra cash you get to keep after taxes!

Great question about the $1200 win! Just wanted to add something important that I learned from experience - make sure you get a copy of that W-2G form from the casino if they haven't already given you one. Sometimes the paperwork gets lost in the excitement of winning, but you'll absolutely need it for your tax return. One thing that caught me off guard was that gambling winnings are subject to self-employment tax in some situations if you're considered a "professional gambler" by the IRS. For a one-time $1200 win, this definitely won't apply to you, but it's worth knowing if you start winning more regularly. Also, regarding your $800 in losses - even if you can't deduct them this year due to documentation issues, it's a good reminder to start keeping detailed records now. I learned this lesson the expensive way! Consider it tuition for "gambling tax school" and you'll be much better prepared if lightning strikes twice. Congrats on the win though - $1200 is a nice score! Just set aside about 25-30% for taxes (depending on your bracket) and you'll still have a nice chunk of fun money left over.

One thing nobody's mentioned yet - the complexity really depends on the nature of your business too, not just the form. My experience: S-Corp: Relatively straightforward but payroll requirements (reasonable compensation) can be a pain. 1065 Partnership: Moderate difficulty but gets exponentially harder with multiple partners, special allocations, or guaranteed payments. C-Corp: Most complex overall, but if it's a simple operation without international components or AMT issues, it might not be that bad. Honestly though, for most small businesses, the S-Corp or partnership usually makes more tax sense anyway unless you have specific reasons for a C-Corp.

don't forget about the schedule C option if your just starting out! way simpler than any of these business returns, just attaches to your 1040. might be all you need if your a one-person operation and don't need liability protection.