That's a huge relief to hear about your experience! Did you ever get any kind of notice or update from them before the refund showed up? I'm wondering if I'll be completely in the dark until money suddenly appears in my account.

I didn't get any notices beforehand at all. The money just showed up in my account one day. The only way I knew they were processing it was by checking the "Where's My Refund" tool on the IRS website, which finally updated after about 8 weeks to show they had received my return. After that, it took about 2 more weeks for the refund to arrive. So yeah, you'll probably be in the dark for a while. Paper returns really do disappear into a black hole for a couple months. If you need the money urgently, that's when I'd recommend trying to talk to someone at the IRS directly.

This happened to me too! Turns out I had rounded my previous year's AGI instead of using the exact number. Such a stupid reason for rejection.

Have you ever tried asking the payroll service to waive the fees for the months you're not running payroll? I've heard some people have had success with that, especially if you tell them you're considering switching to a pay-as-you-go provider.

I actually did try negotiating with Gusto my first year, but they wouldn't budge on the monthly base fee. They explained that even when I'm not running payroll, their system is still maintaining my account, handling compliance updates, and keeping my data secure. I looked into pay-as-you-go options, but for my situation, the convenience of staying with one system and having all my historical data in one place was worth the extra cost. Plus, Gusto handles all my tax filings automatically, which saves me time with those quarterly Form 941s. I just check the numbers before submission.

Do you have any ballpark on what your CPA charges for this service? I'm trying to compare options and everything seems so expensive for basically running payroll once a year.

I pay about $350 for the annual payroll processing, which includes all the year-end forms, tax filings, and payroll calculations. They also charge about $75 per quarter for filing the zero-wage Form 941s, so all in I'm paying around $575 annually. This was much cheaper than the $468+ I would pay for the annual subscription to even the most basic payroll services ($39/month). Plus, I get the benefit of having professional eyes on my numbers who can advise on optimal salary levels and help document reasonable compensation determinations.

Is there any way to tell if I actually owe money to the state vs federal? I'm paranoid I'm going to mail something to the wrong place and then get in trouble for not paying.

Yes, as a 1099 contractor you can absolutely deduct mileage for driving between job sites (but not commuting from home to your first job site of the day or from your last job site back home). For 2025, you can either take the standard mileage rate or track actual expenses like gas, maintenance, etc. The standard rate is usually easier - just keep a log of business miles driven. Also keep those receipts for tools and work clothes! Those are legitimate business expenses you can deduct on Schedule C.

Make sure your boss is actually classifying you correctly! Some employers try to call people "contractors" to avoid paying employment taxes when legally they should be treating them as employees. If they control WHEN and HOW you do the work (vs just the end result), you might actually be misclassified.

Are you a W-2 employee? If yes, then unfortunately no - those home expenses aren't deductible for regular employees anymore. If you're a 1099 contractor, then yes you could deduct the business portion of those expenses (would need to calculate what % is for work vs personal use).

Thanks for this warning! This is making me rethink our plan. Maybe instead of claiming 100%, we should just track the mileage super carefully and go with the actual percentage. I definitely don't want to deal with an audit. Do you know if we need to keep paper logs or if the delivery apps' records are enough proof?

The delivery apps aren't enough for the IRS if you get audited. You need a detailed mileage log showing starting and ending odometer readings for each delivery shift, dates, and business purpose. There are some good apps like MileIQ or Stride that make it easier. Also don't forget you can deduct more than just the car itself! Hot bags, phone mounts, portion of phone bill, extra car chargers - all that stuff is 100% deductible separately from your vehicle expenses. I even deduct part of my Spotify since I play music during deliveries lol.

That's somewhat misleading. Most food delivery people aren't driving vehicles over 6000 lbs - that's like a large SUV or truck. For regular cars, the Section 179 deduction is capped MUCH lower - around $19,200 for 2024 I believe. And remember you can't claim more in deductions than you earn from your delivery work!

You're right - I should have been clearer about the weight limitations. For most standard cars used for food delivery, there are lower caps on Section 179. For 2024, passenger vehicles are limited to around $19,200 for the first year if they weigh less than 6,000 lbs. And you made another great point - your total deductions can't exceed your business income, so if you're just starting out in delivery, you might not have enough income to take advantage of the full deduction in year one. Any unused portion can be carried forward to future years though!