Curious - how did the IRS figure out your lifestyle didn't match your income? I've always wondered how they catch that kind of thing if you're just spending cash.

They looked at my bank deposits compared to my reported income. Even though I wasn't depositing all the cash, enough of it was going into my account to show a pattern. Plus I financed a car with my "total income" (what I told the dealership I made) which was way higher than what I reported to the IRS. The audit process was brutal - they wanted documentation for EVERYTHING. They can also look at your rent/mortgage payments, car payments, credit card spending, etc. They have sophisticated methods to flag returns where the reported income doesn't support the person's known expenses. The stress and anxiety of going through that audit was the worst part - I wouldn't wish it on anyone.

You would report it on Schedule C (Profit or Loss From Business) as self-employment income. You'll need to fill out your employer's name and address in the appropriate sections. Even if they won't give you tax forms, you should still have their business name and location where you work. This means you'll be treated as an independent contractor rather than an employee. Keep detailed records of when you worked and how much you were paid. You'll also need to pay self-employment tax (Social Security and Medicare) using Schedule SE, in addition to regular income tax. While this means a higher tax burden than if you were properly classified as an employee, it's much better than not reporting and facing potential penalties later.

This is super helpful advice, thank you! I have most of these documents but didn't think to keep everything organized for tax purposes. Do you know how many years California can go back to audit someone who moved out of state? I'm worried they might come after me years later.

Generally, California has 4 years from the date you filed your return to audit you. However, if they suspect you substantially underreported income, they can go back 6 years. If they suspect fraud, there's no time limit at all. The most important thing is being able to prove the specific date you ended your California residency. They'll look for contradictory evidence - like if you kept a California driver's license, maintained your primary physician there, or kept significant banking relationships in the state. Make sure everything aligns with your claimed residency change date, and keep those records for at least 6 years.

I used FreeTaxUSA for my move from Michigan to Tennessee last year and it handled the part-year residency return just fine. Their interface for state returns isn't as polished as TurboTax, but it walks you through all the necessary questions about residency dates and income allocation. Saved me like $70 compared to TurboTax and got the same refund amount.

Just curious - do you have to pay for the state tax portion on those "free" tax sites? Last year I started with TurboTax free version but ended up paying $40 for state filing.

FreeTaxUSA charges about $15 for state filing, but federal is completely free. Cash App Taxes (formerly Credit Karma Tax) is totally free for both federal and state, which is what I've used the last few years. The key is to avoid TurboTax and H&R Block if you want truly free filing - they're notorious for upselling and making you pay for features that should be included. With your simple tax situation, there's absolutely no reason to pay anything. The IRS also has a Free File program on their website that links to legitimately free options if your income is under $73,000.

This is a really important point! When I was in college I messed this up one year and it caused problems with my parents' return. My dad claimed me as dependent (which was correct) but I didn't check the "can be claimed as dependent" box on my return. IRS flagged both returns and we had to file an amendment.

Thank you for explaining that! So to be clear, my only option would be filing an amended return (1040-X) if I think I missed something? And I'd need to be specific about exactly what I'm changing from my original return?

Yes, that's exactly right. You need to file Form 1040-X and be very specific about what you're changing and why. The form has columns for original amounts, changes, and corrected amounts. I'd recommend figuring out exactly what deductions or credits you might have missed before filing the amendment. There must be a specific reason your coworker got more back - different tax situations lead to different outcomes.

I've used both TurboTax and TaxAct for the same tax year once (just to compare before submitting) and got nearly identical results. The differences were tiny - like $12. The software shouldn't make a huge difference unless it's helping you discover deductions or credits you didn't know about.

This is exactly the kind of feedback I was looking for - thank you! Did they explain why they were reluctant to provide references? And what kind of limitations did you find in their "unlimited" service when you reviewed the contract?

They claimed client confidentiality was the reason for not providing references, which is somewhat understandable in tax matters, but most firms find ways to connect potential clients while respecting privacy. When we pushed, it felt like they just didn't have many satisfied customers they could showcase. As for the "unlimited" service limitations, the base fee only covered routine updates to existing documentation. Any changes to your corporate structure, new intercompany transactions, or expanding to new jurisdictions triggered additional fees. Also, their response time guarantee only applied to "routine" questions - anything complex was subject to their availability and often took weeks to resolve.

We use Deloitte for our transfer pricing work. They're definitely more expensive than boutique firms like CrossBorder, but the peace of mind is worth it for us. Their documentation has helped us successfully navigate audits in multiple countries. The big downside is that unless you're a major client, you're often working with junior staff except for the final review.

We switched from PwC to a smaller specialized firm similar to CrossBorder and honestly haven't noticed a drop in quality. The Big 4 expertise is excellent but you pay a significant premium. The mid-tier firms often have former Big 4 partners/managers but with more reasonable pricing. The key is finding a firm with specific experience in your industry and countries of operation.