Is a paper logbook really enough though? I thought the IRS wanted something more official or digital these days. And do you record personal trips too or just business ones?

A paper logbook is absolutely sufficient - the IRS doesn't require digital records. What matters is that the record is contemporaneous (recorded at the time, not recreated later) and complete. In fact, many tax professionals consider paper logs to be more audit-proof than digital because they show consistent handwriting over time and can't be easily manipulated after the fact. I record all trips, both business and personal. The IRS likes to see a complete picture of your vehicle usage. This shows them that you're tracking everything and properly separating business from personal use. It also helps if they question your total mileage for the year - you can demonstrate that all miles are accounted for.

Do you deduct actual expenses or take the standard mileage rate? With gas prices these days and all the wear and tear on trucks from our heavy equipment, I'm wondering if actual expenses might be better.

Do you know if California has a first-time abatement program? I'm in the same boat as OP but worried about both federal and state penalties.

California doesn't have an official first-time abatement program like the IRS does. However, they do consider "reasonable cause" explanations for penalty relief. If you can demonstrate that you didn't understand the estimated tax requirements as a new self-employed taxpayer, they may reduce or waive the penalty. The best approach with California is to file on time, pay as much as you can with the return, and include a penalty abatement request letter explaining your situation. Be specific about why you didn't make estimated payments and emphasize that you've corrected your understanding for future tax years.

That's good to know! If I pay the full amount I estimate I owe before filing, will that completely stop additional penalties from accruing?

Could you explain the annualized income method a bit more? I get most of my income in Q4 and always struggle with this.

The annualized income installment method basically divides your tax year into periods (Jan-Mar, Jan-May, Jan-Aug, and Jan-Dec). For each period, you calculate the tax on your income received so far, annualize it, and then figure what percentage of that annual amount you should have paid by that quarter's estimated tax deadline. It's helpful for people with seasonal or irregular income because it matches your required payments more closely to when you actually receive income. For example, if you earn 70% of your income in Q4, the standard method would still require you to make equal estimated payments throughout the year, which might be difficult. The annualized method would require smaller payments earlier in the year. It's calculated on Form 2210, Schedule AI. It's definitely more complex than the regular method, but for someone with heavily weighted Q4 income, it can prevent you from having to overpay early in the year just to meet safe harbor requirements.

Try TaxPlanner Pro - it lets you run multiple scenarios and updates your projected tax and withholding requirements throughout the year. Way better than waiting until December to figure out you're going to owe penalties.

Thanks for the recommendation! I'll give TaxPlanner Pro a look. I definitely need something that will alert me earlier if I'm going to face penalties. December was way too late to fix my situation last year, and I ended up with almost $2,100 in penalties. Not making that mistake again!

Thanks for the tips! What about using my HSA debit card now that I'm not with the company? Mine has the company logo on it - will it still work or do I need a new card?

Your current HSA debit card should continue to work regardless of the company logo. The card is linked to your personal HSA account, not to your employment status. However, if you're concerned, you can call the HSA administrator (number usually on the back of the card) to confirm. Some administrators might eventually issue a new card without the company logo when your current one expires, but the functionality should remain the same in the meantime. If you do end up rolling your HSA to a different administrator in the future, then you would get a new card at that time. But there's no immediate need to do anything with your current card.

It depends on the HSA administrator. Some charge monthly maintenance fees ($2-5) if you're no longer with the employer that established the account. If that's the case and your balance is small, it might make sense to use it up rather than let it dwindle from fees. Check with your HSA administrator about their fee structure for former employees. If there are no fees, I'd personally keep it open since those dollars are still tax-advantaged. Even $300 tax-free is better than nothing for future medical expenses.

Just checked with my administrator and you're right - they charge $3.50 monthly for accounts no longer associated with the employer's group. Guess I'll be spending that $300 quickly before the fees eat it up! Thanks for the advice.

Thanks for the suggestion! I actually thought about that, but the problem is my mortgage payment included principal, interest, taxes and insurance all bundled together. So just seeing the total payment on my bank statement wouldn't tell me how much was specifically interest. I wish it was that easy!

This is what I do for clients all the time (tax preparer here). The Wage and Income transcript shows everything reported to the IRS under your SSN. Quicker than waiting for lenders, especially ones that changed hands or closed.