Thank you for this! I didn't even think about keeping receipts for parking and other stuff related to the implant procedure. I definitely had transportation costs and also had to buy special mouthwash and some prescription pain medication. Would over-the-counter pain meds count too? I spent a lot on those during recovery.

I'm glad that was helpful! For the related expenses, prescription medications definitely count toward your medical expenses. Unfortunately, over-the-counter pain medications typically don't count unless they were specifically prescribed by your doctor (even if they're things you could normally buy without a prescription). Transportation costs absolutely count - the IRS allows you to deduct costs of transportation primarily for and essential to medical care. This includes parking fees, tolls, and mileage if you drove your own car. For 2024, the medical mileage rate was 21 cents per mile (2025 rate will be announced later), so keep track of the distance to and from all related appointments.

This is great advice! I got a bridge done at the local dental school and saved over $3000. It took a bit longer because the student had to have everything checked, but the quality was actually better than work I've had done at regular dentists.

I wish I'd known this before I got the implant done! This is really helpful advice for the future though. There's actually a dental school about 30 minutes from me that I never considered. I'll definitely look into this for any future dental work I need.

Yes, the principle is exactly the same with crypto gambling. The IRS treats cryptocurrency as property, not currency, but the issue of duplicate reporting is handled the same way. You'll report your gambling winnings from the W2-G, and you'll need documentation to show that the crypto transactions reported on your Coinbase 1099 represent the same funds. Be aware that you might also have capital gains or losses from any change in the crypto value between receiving it as winnings and transferring it to Coinbase.

Thanks for this advice! I just started a spreadsheet to track everything. Do you know if there's a specific format the IRS prefers for gambling logs? And how detailed do the session records need to be?

The IRS doesn't require a specific format for gambling logs as long as they contain complete and accurate information. The more detailed, the better in case of an audit. For session details, I include start/end times, specific games played, and bet amounts. For poker, I track each tournament separately. For sports betting, I note the specific games/events. I also save all receipts, tickets, and confirmation emails. The key is being able to match your documented activity with the amounts reported on your tax forms.

I hadn't even thought about changing my business structure! Is that process complicated? And does it make record-keeping even more strict?

The process isn't too complicated - you file Form 2553 with the IRS to elect S-Corp status. The main thing is you need to start running payroll and paying yourself a reasonable salary, which means quarterly payroll tax returns. Record-keeping is more formal, yes. You'll need better separation between personal and business finances (which you should do anyway), and you'll have to file a separate tax return for the business (Form 1120-S) in addition to your personal return. Many people use a payroll service to handle the salary part. It's more paperwork for sure, but the tax savings can be significant because only your salary is subject to self-employment tax, not the full business profit.

This! I got hit with a $1,200 penalty my first year in business because nobody told me about quarterly payments. Such a painful lesson.

I've been making some payments but probably not enough. Is there a specific form I should be using for these quarterly payments?

Do you know if you can deduct mileage if you work from home but occasionally drive to client meetings or to pick up supplies?

Absolutely you can! Any driving from your home office to client sites, suppliers, business meetings, etc. counts as deductible business mileage. Just make sure to keep a log with dates, starting/ending mileage, and purpose of each trip. The only driving that's not deductible is regular commuting to a primary workplace. But if your home is your primary workplace (home office), then driving to clients or for business purposes is generally deductible. There's a pretty generous mileage rate too - it was 65.5 cents per mile for 2023.

Which tax software do you recommend for first-time self-employed? I've used the free versions before but now I need something that handles Schedule C.

$1500 is a lot to pay when there are software solutions that do the same thing for way less. I used CoinTracker for my CP2000 response and it worked fine.

You're right that software can work for simpler situations. My case was particularly complex with DeFi staking, liquidity pools, and cross-chain transactions that most software couldn't handle correctly at the time. For someone with straightforward trades on major exchanges, software might be sufficient. But when you're facing a $40k tax bill and have complex transactions, sometimes the expertise and representation of a professional is worth the cost. They can also help if you need to negotiate a payment plan or have other complicating factors in your tax situation.

This is unfortunately common with crypto. If you can't access the original exchange data, try these approaches: 1. Bank/credit card statements showing deposits to those exchanges 2. Email confirmations of purchases 3. Blockchain explorers to verify transactions from your wallet addresses 4. If you have partial records, you can sometimes reconstruct activity based on withdrawals to known wallets Document your attempts to obtain complete records. The IRS does recognize that some extinct exchanges make perfect recordkeeping impossible. They generally just want to see a good faith effort to accurately report your activity. If all else fails, you may need to use "other methods" to establish basis, which a tax professional can help with. It's better to respond with partial records than to ignore the CP2000 entirely.