Thanks for pointing this out! My company only does reimbursements after I submit receipts, so it sounds like I'm good. But do you know how advances are treated differently?

Advances can be tricky. If you receive money before incurring the expense, it might be considered an "advance" rather than a reimbursement. If you don't provide adequate documentation afterward or don't return unused funds, the IRS might consider it a non-accountable plan. In a non-accountable plan situation, the advance would be included in your W-2 income, and you'd have to claim any eligible expenses as miscellaneous itemized deductions (which are currently suspended until 2026). Much worse tax treatment than a proper accountable plan reimbursement.

I've been using Expensify for the past year and it's been great. You can snap photos of receipts on the go and it automatically extracts the info. Makes submitting to accounting super easy too.

Does Cash App Taxes handle things like education credits too? My kid is working but also in college and I'm worried about missing out on education tax benefits.

Yes, Cash App Taxes does handle education credits like the American Opportunity Credit and Lifetime Learning Credit. It covers most common tax situations that students and young adults encounter. For more complex situations though, you might want to double-check with another resource or consider upgrading to a paid version of software. But for a basic return with some education credits, the free version should work fine.

Yes! This is super important! I didn't file my first year working because I made under the threshold, then learned later I would've gotten a refund of everything withheld. Such a waste!

Any app recommendations for tracking mileage? I've been using a paper log but it's a pain.

I personally use MileIQ, but there are several good ones like Everlance and Stride. The key is finding one that automatically detects drives and lets you easily classify them as business or personal. Make sure whatever app you choose lets you export detailed reports that include start/end locations, odometer readings, and business purpose. The app I mentioned even lets you add notes for each trip which is super helpful if you get questioned about specific drives later. Most have free versions that work fine if you don't drive tons of miles.

Thanks, you're right - I do get a 1099-NEC that includes everything (services + mileage all together). So based on what you're saying, I should be able to deduct the full mileage at the standard rate since I'm paying taxes on the entire amount, including what was meant as "reimbursement"?

Yes, that's exactly right. Since your 1099-NEC includes both your service payments and mileage reimbursements as one lump sum, the IRS considers it all taxable income. Therefore, you are absolutely entitled to deduct all your business mileage at the standard rate on your Schedule C. Just make sure your mileage log is detailed and accurate to support your deduction if you're ever questioned. Include dates, destinations, business purpose, and mileage for each trip.

Do you know if the AGI has to be exactly right? Like if my AGI was $48,296.75, would I enter 48296 or 48297? Or would I use cents too somehow?

You only need to enter the whole dollar amount without cents. So if your AGI was $48,296.75, you would just enter 48296. This is one of the most common mistakes people make. The system only asks for 5 digits though, which means if your AGI has more than 5 digits (like in your example), you'll need to enter all of them - not just 5 digits. The "5-digit" terminology is confusing because it's really asking for your Self-Select PIN if you created one, or your AGI if you didn't.

This worked for me too! I had a really low income year in 2022 and my AGI was actually negative. I kept trying different numbers until I finally just entered "0" and my return was accepted.

Is the 5-year thing a hard rule? I thought there was some flexibility if your business circumstances changed significantly.

There's no absolute 5-year "lock-in" rule, but the IRS generally won't allow you to terminate S status within 5 years without a legitimate business purpose. A significant change in business circumstances can qualify, but simple "tax planning" or "it was more work than I expected" usually won't be enough. The IRS is wary of businesses jumping back and forth between tax statuses purely to minimize taxes, so they put these restrictions in place. If you do want to terminate within 5 years, you'd need to file a letter requesting permission and explaining your circumstances.

Do you think the tax savings have outweighed the extra costs and hassle in your case? Would you do it again if you had the choice?