Is there a good app you recommend for tracking business miles? I always forget to log them and probably lost out on hundreds in deductions last year.

I use MileIQ and it's been super helpful. It automatically tracks when you're driving and then you just swipe right for business trips and left for personal. Takes like 2 seconds per trip. Stride is another good one that's free, but I find it misses some trips since you have to manually start tracking. Either way, the standard mileage deduction is 65.5 cents per mile for 2023, so it adds up crazy fast especially for renovation work where you're going to different job sites!

In my experience it's worth checking! I amended my 2022 return after ignoring that message for months and got an additional $1200 refund. I had missed some legit business expenses my first year. Different software sometimes finds different deductions.

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.

Did you have to file an amended return (1040-X) along with the 8949 forms when responding to the CP2000? I'm confused about whether I need to redo my whole tax return or just submit the missing forms.

You generally don't need to file a 1040-X when responding to a CP2000 notice. The CP2000 is just a proposed adjustment, not a final determination. You only need to submit the missing or corrected forms (in this case Form 8949 and Schedule D) along with your response to the notice. The IRS will recalculate your tax based on the information you provide. If they accept your explanation and documentation, they'll either send you a corrected CP2000 or a "no change" letter. Only if you discover additional issues not related to what the CP2000 mentions would you need to file an amended return separately.

Wait this is really helpful. I got a 1099-K from my exchange, not a 1099-B. Which box would I check then? Does that count as "not reported to the IRS"?

If you received a 1099-K, then your basis wasn't reported to the IRS. A 1099-K only shows the gross proceeds (total amount of sales) but doesn't include your cost basis information. In this case, you would check Box C for short-term transactions or Box F for long-term transactions since basis was not reported to the IRS. And you'll need to be extra careful to document your cost basis for each transaction, as that's what the IRS is likely questioning on your CP2000 notice.

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.

Does the CP2000 notice count as an audit? I'm always terrified of anything that might trigger the IRS to look more deeply at my returns.

No, a CP2000 notice isn't technically an audit. It's classified as an "automated adjustment" where their computer systems have detected a mismatch between income reported to them versus what's on your return. It doesn't involve the detailed examination of your entire tax situation that a true audit would include. That said, how you respond to a CP2000 could potentially lead to further review if there are significant issues or discrepancies in your explanation.

is there a benefit to e-filing the amendment vs mailing it in? I thought amendments had to be on paper