Regarding state taxes - is there any documentation I should keep to prove I was living abroad if my permanent address is still in the US? I'm worried my home state (California) will try to tax me even though I've been in Europe for most of the year.

For state tax residence documentation, keep copies of rental agreements, utility bills in your name from your foreign residence, entry/exit stamps in your passport, and airline tickets. California is particularly aggressive about claiming residents, so you'll want solid proof you've established a temporary residence elsewhere. If you're maintaining any California ties (driver's license, voter registration, bank accounts, etc.), document when those will be changed to your new location. Some digital nomads even take the step of establishing residency in a no-income-tax state before leaving the US, though that requires more planning and legitimate ties to that state.

I've used FreeTaxUSA for the past 2 years as a self-employed person living in Germany. They support all the forms you'd need including Schedule C, Form 2555 for Foreign Earned Income Exclusion, Form 1116 for Foreign Tax Credit, etc. Much cheaper than TurboTax and has worked great for my situation.

Do you include car washes as a deductible expense? I've heard mixed things about whether the IRS considers that maintenance or a personal expense since you'd presumably wash your car anyway.

Car washes are definitely deductible as a maintenance expense for delivery drivers! When you're using your vehicle for business, keeping it clean is part of maintaining your professional image and service quality. Just like other expenses, you'd deduct the business percentage based on your business vs. personal mileage ratio. I keep all my car wash receipts and even have a monthly subscription to a local wash service that I deduct at my business use percentage (which is about 78% for me). The key is being reasonable - weekly washes might be justified, but daily washes might raise flags with the IRS.

What app do you use for automatically tracking miles? I've tried a couple but they either drain my battery or miss trips.

Wait really? I did make quarterly estimated state tax payments throughout 2023 for my side business. So I can count both those AND the balance I paid in April 2023 for my 2022 taxes? That might actually push me over the standard deduction threshold!

Yes, absolutely! Any state income taxes you actually paid during calendar year 2023 can be included on your 2023 federal Schedule A. This includes both the balance due from your 2022 return that you paid in 2023 AND any estimated payments you made during 2023 for your 2023 taxes. Just be aware there's a $10,000 cap on the total state and local tax deduction (SALT cap), which includes income taxes, property taxes, etc. But for most people, this helps push their total itemized deductions above the standard deduction threshold.

Totally agree! I've been using H&R Block for years and they never explain this clearly. I've probably left thousands of dollars on the table over the years by taking the standard deduction when I might have benefited from itemizing. The tax prep industry benefits from keeping things confusing.

Thanks for agreeing with me on this! I feel like there should be some kind of requirement for tax software to actively check if itemizing would benefit you rather than just presenting it as an option. I'm definitely going to be more careful this year and run the numbers both ways. Between mortgage interest, charitable donations, and now understanding I can include state taxes paid, I might actually be better off itemizing for the first time.

Yes, I've been checking "Where's My Refund" for months for my 2022 return. It just says "Your tax return is still being processed" with no other information. I did move in late 2022, but I updated my address with USPS. Do I need to update my address directly with the IRS too?

Yes, you absolutely need to update your address directly with the IRS. The USPS mail forwarding doesn't automatically notify the IRS of your new address. This could definitely explain why you might have missed important letters about your 2022 return! You can update your address with the IRS by submitting Form 8822 (Change of Address). In the meantime, I'd recommend using one of the methods others suggested to contact the IRS directly about your 2022 return - especially now that we know you moved, there's a good chance they've been sending verification requests or other important notices to your old address.

Yes! I received my very delayed 2022 refund about 3 weeks after filing my 2023 taxes. The two systems operate independently so one doesn't affect the other. My 2022 return had some issues with education credits that needed manual review, but they eventually sorted it out without me having to call.

Thanks for the advice! I'll definitely pay what I calculated I owe now. How long did your audit process take from start to finish? I'm worried this is going to drag on for months.

My audit took about 4 months total from first notice to final resolution. However, I made the mistake of sending my initial response by regular mail, and they claimed they never received it, which added about 6 weeks to the process. Once they actually reviewed my documentation, things moved relatively quickly - about 3 weeks for them to send a response accepting most of my explanation. There was one additional clarification they needed, which took another 3-4 weeks to resolve. The whole thing would have been much faster if I'd used certified mail from the beginning and if I'd paid the undisputed amount immediately.

That's bad advice. IRS charges both penalties AND interest, which can add up quickly. The failure-to-pay penalty is 0.5% of the unpaid taxes for each month, plus interest at the federal short-term rate plus 3%. You can always get a refund if you overpay, but you can't get penalties back as easily.