2 Does requesting those transcripts trigger any kind of audit or review? My cousin says anytime you contact the IRS directly you're putting yourself on their radar for an audit. Is that true?

17 Requesting your wage and income transcripts absolutely does not trigger an audit or special review. That's a common misconception. These transcripts are your right as a taxpayer and millions of people request them every year for perfectly routine reasons. The IRS selects returns for audit based on specific statistical formulas looking for outliers and unusual patterns, not because someone requested their own information. In fact, being proactive about your tax situation by requesting transcripts and filing accurately is more likely to help you stay off the audit radar.

1 Not sure what software he used, but that's a good point about the W-2 possibly being wrong. How would he even go about proving that though? 7-Eleven probably isn't going to just admit they made a mistake, especially 2 years later.

Good point! I'm in New York and got surprised last year when my state return didn't match the federal deductions. Do you know if there's a good resource that compares state vs federal depreciation rules?

I don't know of one comprehensive resource that covers all states, unfortunately. Each state has its own tax department website that usually outlines the differences between federal and state treatment of depreciation and Section 179. For New York specifically, they've partially decoupled from federal bonus depreciation rules but do follow the federal Section 179 limits with some modifications. Your best bet is to check the NY Department of Taxation and Finance website or consult with a tax professional who specializes in your state. I've found that state-specific tax forums can also be helpful for these kinds of questions.

What's the easiest way to track mileage? Do you use an app or just write it down?

I use MileIQ app and it's been a lifesaver. It automatically tracks all my drives and I just swipe right for business trips and left for personal. At the end of the year, I can export a detailed report for tax purposes. Before that, I tried keeping a paper log but always forgot to update it. The IRS can be really strict about mileage documentation during audits, so having an app that automatically creates timestamped records with starting and ending locations has given me peace of mind. Some other popular options are Everlance and Hurdlr - they all have free versions you can try.

This is super helpful! I just checked my draft 2024 return and found Schedule C was there even though I'm purely W2. When I dug deeper, turns out I had checked a box about "online selling" because I sold some old furniture on Facebook Marketplace. TurboTax was treating that as self-employment and letting me allocate home office space to that "business." Would this tiny amount of selling stuff online actually qualify for home office?

For casual selling of personal items like furniture on Facebook Marketplace, that's typically not considered self-employment and wouldn't qualify for home office deduction. The IRS generally views that as selling personal items at a loss (since you're selling used items for less than you paid). For a home office deduction to be valid for self-employment, you need regular and exclusive use of the space for business purposes, and the activity needs to have a profit motive with regular, ongoing activity. Occasional selling of personal items doesn't meet those criteria. You should uncheck that box if you're not actually running a business with intent to make profit.

Same thing happened to me! The home office change affected my total itemized deductions which made them less than the standard deduction, so TurboTax switched me to standard. But then that made some of my state deductions invalid. It was a whole domino effect. Ended up owing about $2450 more than my original calculation.

Couldn't you deduct the amount you paid to your friend as a business expense though? Like as a contractor payment or something?

That's what I thought too, but it's not that simple. Unless you have a formal agreement and you're paying them as a contractor with proper documentation (including a W-8BEN form for foreign contractors), those payments aren't automatically deductible. The IRS wanted to see proof that these were legitimate business expenses and not just me moving money around. Without the right paperwork established beforehand, they considered all the income as mine. Plus, there are strict reporting requirements for payments to foreign persons that I wasn't aware of. The whole thing turned into an audit nightmare.

This happened to my brother! His "friend" imported some electronics that turned out to be counterfeit. Customs seized the shipment and my brother got hit with a $15,000 fine since the business was in his name. The "friend" disappeared and my brother was stuck with the bill.

Thanks for this additional info! I definitely will file long before that 3-year deadline hits, but good to know there's an absolute cutoff. Does the same apply for state taxes or does that vary by state?

The 3-year refund claim deadline is for federal taxes. State tax deadlines vary by state - some follow the federal 3-year rule, while others have shorter or occasionally longer timeframes. For example, California and New York generally follow the federal 3-year rule, but some states like Montana only give you 2 years to claim a refund. I'd recommend checking your specific state's tax agency website for their rules since it's not standardized across all states.

True, but with the current disaster at the IRS with processing times, you might not get that refund anytime soon anyway. My brother filed in April and just got his refund last week!