Wait, I hadn't even thought about state taxes! Thank you for bringing this up. So even though I was only in Texas for a few months as a baby, if it had been a state with income tax, I might have needed to file there too? That's wild! Do you know if there's a similar "streamlined" process for state tax compliance?

You generally only need to worry about state taxes if you have current ties to that state (property, income from there, voting registration, driver's license, etc.). Since you left as a baby and have no connections, most states wouldn't consider you a resident. State tax amnesty programs vary widely by state. If you had been born in a high-tax state like California, you might have needed to address it, but their Voluntary Disclosure Program typically looks at fewer years than the federal program. Again, for your Texas situation, it's not a concern, which is one small piece of good news in this complicated situation!

The exit tax typically applies if your net worth is over $2 million or your average annual net income tax for the 5 years ending before the date of expatriation is more than $172,000 (2021 figure). The $50k investment alone wouldn't trigger covered expatriate status.

8 Does that apply even if you occasionally used the car for work and claimed mileage deductions? I'm in a similar situation but I used my car for both personal and some business travel.

3 That's a good question. If you used the car for business and claimed mileage deductions, then it's considered a mixed-use asset. In that case, you might be able to deduct a portion of the loss that corresponds to the business use percentage. For example, if you can document that 30% of your vehicle use was for business (through mileage logs), you might be able to deduct 30% of the loss. However, this gets complicated because you've already received tax benefits through the mileage deductions during ownership. It's definitely one of those situations where having good documentation of your business use percentage is crucial, and you might want to consult with a tax professional for your specific case.

5 There's no minimum threshold for reporting capital gains like this. Technically, any profit should be reported on your tax return, even small amounts.

I tried to get my transcript online but couldn't pass the identity verification since I don't have a mortgage, car loan, or credit card in my name yet (I'm pretty young). Is there another way to get this information?

Yes, if you can't verify your identity online, you can use Form 4506-T to request your transcripts by mail. It takes about 10 days to receive them. You can also call the IRS transcript request line at 800-908-9946 to order transcripts by phone. Another option is visiting a local IRS Taxpayer Assistance Center in person - they can provide transcripts on the spot, but you need to schedule an appointment first by calling 844-545-5640. Bring your photo ID if you go this route.

This is really good advice! My friend works for the state AG office and says they take tax preparer fraud very seriously. They can also help document the fraud for the IRS which speeds up your refund recovery.

That's a great idea! I didn't even think to check with my university. Do you know what department typically offers this kind of service? Would it be financial aid or something else?

Usually it's either through the financial aid office or the student services department. Some universities also have it through their business school or accounting program where accounting students (supervised by professors) provide tax help as part of their practical training. The best approach is to just email your university's general help desk or student services and ask if they offer tax assistance. If they don't have an in-house program, they might still know about local resources specifically for students.

This is so important! And don't forget to keep track of any home office expenses. If you dedicate a space solely to your research work, you can deduct a portion of your rent and utilities.

How exactly did you document the "worthlessness"? Did you need an independent appraisal or was your own documentation sufficient? I'm in a similar situation but don't want to spend more money on an appraiser if I don't need to.

I used a combination of internal financial statements and business records rather than paying for an expensive appraisal. I created a documentation package that included monthly P&L statements showing consistent losses, screenshots of competitor pricing that showed we couldn't compete profitably, documentation of failed attempts to sell the business (emails with potential buyers or brokers), and a formal business memo explaining the market conditions that made continuation impossible. My CPA said the key was showing I had made legitimate efforts to make the business work or sell it before declaring it worthless. We also included bank statements showing the business accounts were depleted. This approach worked for me, but situations vary - if your business had substantial physical assets rather than just a website, you might need more formal valuation. The most important thing is showing you've exhausted reasonable options before taking the tax loss.

If you're expecting lower income next year, it might make sense to delay the liquidation until January. Capital losses (which some of this likely will be) are more valuable in higher income years since they offset income. But if some qualifies as ordinary loss under Section 1244, that might be more valuable in a higher income year.