Oh wow, I hadn't even thought about the state tax implications. Do you know if there's any way around this? Would it help if they established residency in another state before going to Pakistan next time?

Yes, establishing residency in a no-income-tax state before leaving for an international assignment can help. States like Florida, Texas, Nevada, etc. would be options. They would need to genuinely establish residency though - driver's license, voter registration, bank accounts, etc. For the current situation, they should look closely at NY's 183-day rule. If they were physically present in NY for fewer than 183 days and don't maintain a permanent abode there, they might have an argument against NY residency. However, with 6 months (approximately 180-183 days), they're right on the edge. Documentation of exact days in and out of NY will be critical.

I've used Form 8833 before and it's actually not that bad. Just make sure your friend documents which specific article of the US-Pakistan tax treaty they're relying on. The form is pretty straightforward - just explains what treaty benefit you're claiming and why you qualify.

Is Wave better than just using a spreadsheet? I'm doing rideshare and food delivery and trying to track everything but getting overwhelmed.

I find Wave much better than spreadsheets for a few reasons. It automatically creates the right categories for taxes, connects to your bank account to import transactions (so you don't have to manually enter everything), and generates reports you can use for tax filing. The learning curve is pretty minimal compared to spreadsheets where you have to create your own formulas and categories. Plus, it's specifically designed for small businesses and self-employed people, so it knows what information you need for taxes. The basic version is free, which is all I need for my side gig income tracking.

That sounds really helpful! Do they help with the self-employment forms too? I've heard those are more complicated than regular W-2 employment.

I tried VITA last year and they refused to help with my Schedule C for rideshare driving. Said it was "out of scope" for their volunteers. Maybe it varies by location though.

The 1099-K reports the gross amount processed through Square, which typically includes everything - your fees, sales tax collected, tips, etc. When you complete your Schedule C, you would report the full 1099-K amount as gross receipts, but then you can make adjustments. Sales tax you collected and then remitted to your state should not be counted as income. You'd subtract this amount on Schedule C (usually on the "Other expenses" line with a clear description like "Sales tax collected and remitted"). This way, you're only paying income tax on your actual earnings, not on the sales tax you collected as an intermediary.

Wow I had no idea about this deduction! Is there anything special I need to qualify? My martial arts school is pretty small, just teaching evening classes a few times a week.

You should qualify even with your small evening classes! The main requirements are: 1) You have qualified business income (basically profit from your business) 2) You file as a sole proprietor, partnership, S corporation, or LLC There are income limitations but they're pretty high ($170,050 for single filers in 2025), so unless your total taxable income from all sources exceeds that, you should be fine. You don't need to have employees or a formal business structure. The calculation is straightforward for smaller businesses - it's generally just 20% of your net profit from the business. Use Form 8995 (the simplified version) unless your income is above the threshold. It's definitely worth taking the time to claim this deduction!

Do they handle all types of tax issues or just specific problems? I've got multiple notices I need help with.

The Taxpayer Advocate Service (TAS) is designed primarily for situations where you've tried normal IRS channels without success or are experiencing significant hardship. They don't handle routine questions about notices. For multiple notices, you're better off contacting the specific numbers listed on each notice first. TAS is more of a last resort when you're stuck in the system or facing serious consequences like wage garnishment or bank levies.

Did you end up having to pay it? Or can you contest their decision?

FreeTaxUSA is my go-to as well! So much cheaper than TurboTax and handles everything just as well. I've used it for self-employment income too and it walks you through all the deductions clearly. Definitely recommend it over paying hundreds for essentially the same service.