Is there a good app you recommend for tracking all that stuff? I'm terrible at keeping receipts but need to start if I'm gonna do this right.

Quickbooks Self-Employed is what I use - you can connect your bank account/credit card and it will automatically categorize expenses. It also has a built-in mileage tracker that uses your phone's GPS. Everlance and Stride are good free options if you're just starting out. The key is consistency - set aside 15 minutes each week to review your expenses and mileage, categorize everything correctly, and upload any paper receipts. Take photos of receipts immediately when you get them so you don't lose them. This regular maintenance makes tax time so much easier than trying to reconstruct everything at the end of the year.

This is super important! My brother tried to claim his whole car payment for his food delivery side gig and got audited. The IRS doesn't play around with vehicle deductions - they're one of the most scrutinized areas of tax returns.

What exactly is a Spousal IRA? Is that different from a regular Traditional IRA? We do file jointly, so this sounds like it might be relevant for us. Also, she's not diplomatic staff - she works in their cultural affairs office, so I think she's considered regular administrative staff. Would that still qualify for any special tax treatment?

A Spousal IRA isn't actually a special type of account - it's just a regular Traditional or Roth IRA that a working spouse can contribute to on behalf of a non-working spouse. In your case, since your wife is working, it wouldn't apply directly. I misunderstood your situation initially. For administrative staff at foreign embassies, the tax treatment depends on the specific tax treaty with that country. Generally, administrative staff don't get the full tax exemptions that diplomatic staff receive, but there might still be special provisions. Some administrative staff are exempt from FICA taxes but still pay federal income tax. The pay stubs should indicate if taxes are being withheld.

That's actually terrible advice for retirement planning. Tax-advantaged accounts like IRAs are almost always better than taxable accounts for long-term retirement savings. The tax-free growth over decades makes a massive difference in the final balance.

I wasn't suggesting to completely ignore retirement accounts - just pointing out an alternative since they already have some retirement savings and might want flexibility. You're right that the tax-advantaged growth in IRAs is valuable, but taxable accounts have advantages too - no early withdrawal penalties, no RMDs, and potentially favorable capital gains rates. The ideal approach is usually a mix of both tax-advantaged and taxable accounts to give yourself options in retirement. Plus, with the contribution limits on IRAs being relatively low, many people need to use both types of accounts to save adequately for retirement anyway.

I had no idea about the business registration requirement! Is this something I can do online or do I need to go to a government office? Does it cost a lot?

Yes, most states let you register online through their Secretary of State or Department of Revenue website. Costs vary widely depending on location - some places charge as little as $25 while others might be $100+ for a basic registration. You'll also want to check your specific county/city requirements as some local jurisdictions have their own permits on top of state registration. I'd recommend starting with a Google search for "[your state] business registration sole proprietor" to find the official government site with the forms you need.

What app do you use? I've been trying to track my mileage for my mobile dog grooming business but I always forget to log it.

That's a good idea, but since I'm getting a promotion with a significant salary increase, I'm not sure my past paychecks would give an accurate picture. The tax brackets might change with the new income level, right?

You're right about the tax brackets potentially changing with a higher salary. In that case, you could use your current paystub as a starting point and then adjust the calculations. For example, if you're currently making $60,000 and moving to $78,500, you could calculate the percentage increase (about 30.8%) and then apply different increase rates to different deduction types. Federal taxes might increase at a higher rate due to progressive brackets, while something like disability insurance might simply scale proportionally with income.

This is so important! My friend thought her raise would actually make her take home less because she didn't understand marginal tax brackets. She almost turned down a promotion because of this misconception!

What happened with the audit? Did you have to pay penalties or just return the tax benefit?

I don't think he's filed taxes the last couple years since he hasn't had income. But that's a good point, I should probably ask him to be sure before I file.

This is super important! Both of you can't claim him. I had this happen with my niece and it delayed my refund by 5 months while the IRS sorted it out. Make sure you have that conversation before either of you file.