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A tax tip most people miss: if you're going to make a mixed trip like this, consider structuring your travels to make more of the mileage qualify as business. For example, if you're already in Albuquerque, see if there are any potential clients, suppliers, or business opportunities you could pursue there before heading to San Diego. If you can document legitimate business purposes for contacts in New Mexico, you might be able to convert what would have been purely personal mileage into partially business mileage. Just make sure you document everything thoroughly - names, dates, business purpose, etc.
That's actually brilliant - I never thought about finding potential business opportunities in Albuquerque! I work in software development consulting and there might actually be some tech companies there I could connect with. How detailed do my records need to be for this to count? Would emails setting up meetings be sufficient documentation?
Emails setting up meetings would be excellent documentation. You want to establish both your intention to conduct business and that actual business activities took place. Save those emails, take notes during the meetings, keep any business cards you collect, and record all mileage specifically related to these business activities. If you end up gaining any clients or doing future work based on these connections, that strengthens your case even more. Just remember that the primary purpose of the Albuquerque portion still needs to be business for those miles to count, so make sure you're spending more time on business activities than personal ones while there.
I'm confused about something - if I'm on a pure business trip but I stop for dinner or to see a tourist attraction, does that somehow disqualify those miles? Like if I drive from Sacramento to San Diego for business, but take a 30-mile detour to see something cool, how do I calculate that?
The 30-mile detour to see a tourist attraction would be personal miles and not deductible. However, the direct business route from Sacramento to San Diego would still be fully deductible. Think of it as drawing a line on the map - the most direct reasonable route for business is deductible, any detours for personal reasons are not. Stopping for meals during business travel doesn't disqualify your miles though - that's considered a necessary part of business travel.
Does anyone know if using tax software (like TurboTax Self-Employed) handles the annualized method calculations? I'm terrible at doing these worksheets myself.
TurboTax Self-Employed does have an estimated tax calculator, but in my experience it doesn't handle the annualized method very well. It more focuses on the equal payment method. I ended up using the IRS worksheets anyway. QuickBooks Self-Employed does a better job with variable income and quarterly calculations, but it's still not perfect for true annualization calculations.
One warning about AIIM - if you have any capital gains or losses, especially if they're significant, the calculation gets MUCH more complicated. I tried doing this myself last year and messed it up pretty badly.
One thing to consider OP - I think you might still be able to claim the Recovery Rebate Credit for the stimulus payments you missed, but you'd need to file the appropriate year's tax return. The first two stimulus payments were for tax year 2020 (filed in 2021) and the third was for tax year 2021 (filed in 2022). You can still file those returns since they're within the 3-year window! So while your 2018 refund is unfortunately gone, you might be able to get those stimulus payments by filing 2020 and 2021 returns ASAP.
Ok this is at least some good news! Do you know roughly how much the stimulus payments were? And do I need any special documentation to claim them now?
The stimulus payments totaled $3,200 per eligible adult - $1,200 for the first payment, $600 for the second payment, and $1,400 for the third payment. There were additional amounts for dependents too. You don't need any special documentation beyond what you'd normally include with your tax return. When you file, you'll just need to complete the Recovery Rebate Credit section where you'll indicate that you didn't receive the payments previously. Most tax software will walk you through this with a series of questions about which payments you received.
Just an FYI - while you can't get your 2018 refund anymore, you should still file that return anyway if you're going to file for later years. Having gaps in your filing history can trigger additional scrutiny, and having a complete record helps establish your overall tax situation more clearly.
As someone who also gets overwhelmed with taxes, I found that taking a community college course on small business accounting really helped me. It was super affordable (like $120 for the semester) and designed for non-accountants. The instructor focused specifically on tax preparation and record-keeping for small businesses. Also, don't underestimate the value of setting up simple systems from the start. I use a dedicated business credit card for ALL business purchases, which automatically creates a record. Then I just download the year-end summary which categorizes everything.
Did the community college course cover things like estimated quarterly taxes? That's the part I always struggle with.
Yes, the course definitely covered quarterly estimated taxes! The instructor spent an entire session on how to calculate them properly and how to avoid penalties. They even provided spreadsheet templates that made the math much easier. The course also covered when you actually need to make quarterly payments (since not everyone does) and how to adjust them if your income fluctuates throughout the year. It was honestly the most practical and helpful part of the entire course for me.
Has anyone tried the YouTube channel "Tax Simplified"? I just discovered it and the videos seem really clear, but wondering if the information is reliable before I start following their advice.
I've been watching their videos for about a year now. The information is solid - the channel is run by a CPA with small business experience. The playlist on "Small Business Basics" is especially good for beginners. Just be aware that some older videos might not reflect the latest tax law changes, so always check the upload date.
Leeann Blackstein
Don't forget about social security taxes! Even if you're eligible for foreign tax credits or exclusions, you might still owe US Social Security and Medicare taxes on your foreign earnings if you're employed by a US company. The rules are different for self-employed people working abroad. If Kenya and the US have a totalization agreement (social security agreement), the rules might be different, but I don't think they do. Worth looking into though!
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JaylinCharles
β’I completely forgot about social security taxes, thank you! Do you know if there's a minimum threshold for this? Like if I'm only there for 8 months, would that change anything about Social Security obligations?
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Leeann Blackstein
β’For Social Security taxes, the duration of your stay doesn't typically create a minimum threshold. If you're employed by a US company, they'll generally continue to withhold Social Security and Medicare taxes from your paychecks regardless of where you're physically working, unless there's a totalization agreement with that country. As far as I know, the US and Kenya don't have a totalization agreement, so you'd continue paying into the US Social Security system. The good news is this means you'll continue earning credits toward your eventual US Social Security benefits, even while working abroad.
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Ryder Greene
Anyone know how the Kenya situation specifically works? I spent 3 months there last year working remotely and honestly just didn't bother figuring out the tax situation... Did I mess up? Should I file something retroactively??
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Carmella Fromis
β’I'm not a tax expert, but from what I understand, Kenya typically doesn't consider you a tax resident unless you're there for 183+ days in a year. Since you were only there for 3 months (presumably less than 90 days), you likely weren't subject to Kenyan income tax. If you did everything correctly with your US taxes and reported all your income there, you probably don't need to worry about filing anything retroactively for Kenya. But if you're concerned, it might be worth consulting with a tax professional who knows the Kenyan tax system.
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Ryder Greene
β’That's a relief! Yes I was there for exactly 89 days and did report everything on my US taxes. Was worried I might have some surprise tax bill waiting for me from the Kenyan government. Thanks for the info!
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