Great question! I deal with similar situations regularly in my practice. A few additional considerations beyond what others have mentioned: Make sure to keep the wedding invitation as documentation - it shows you were specifically invited due to your business relationship. Also, consider having a brief follow-up meeting or call with the client after the wedding to discuss any business topics that came up during conversations at the event. This helps establish that business discussions actually occurred. One thing I'd add about the gift situation - if you're giving cash or a check, that's clearly subject to the $25 limit. But if you're contributing to a honeymoon fund or registry item, the deduction treatment might be different. The key is whether it's considered a "gift" versus some other type of business expense. Also, don't forget to prorate your hotel costs if you extend the stay for personal reasons. Only the nights directly related to the business purpose (wedding + any business meetings) would be deductible. The documentation suggestions from others are spot-on - this is exactly the type of expense the IRS scrutinizes, so having a clear paper trail showing the business necessity is crucial.

One strategy I've used successfully for client events like this is to create a simple business memo before you go documenting your business justification. Include details like: - The client's annual revenue/importance to your business - Specific business relationships you hope to maintain/develop - Any pending contracts or negotiations that could be affected - Names of other business contacts who will likely attend This creates a contemporaneous record of your business intent that's much stronger than trying to recreate the justification later if audited. I also recommend taking discrete photos of business cards you collect or jotting down notes about business conversations you have at the event. For the substantial gift concern - consider splitting it between a modest personal gift (subject to the $25 limit) and a more significant branded corporate gift or service voucher from your company (which could qualify as advertising/promotional expense rather than a business gift). Many clients actually prefer receiving something unique from your business over generic expensive gifts anyway. The key is being proactive about documentation rather than trying to piece together the business case after the fact!

As someone who's dealt with IRS audits before, I can confirm what others are saying here. The IRS absolutely does NOT require tax preparers to collect and store copies of birth certificates, social security cards, or utility bills for routine tax preparation. What's particularly concerning about your situation is that your preparer is being vague about the specific requirements. Any legitimate preparer should be able to cite the exact IRS publication or form that requires specific documentation. The fact that he can't give you specifics is a major red flag. For due diligence requirements (mainly for EITC, Child Tax Credit, and education credits), preparers need to verify eligibility, but this typically involves asking questions and noting in your file that they've seen certain documents - not making copies. The IRS Publication 4687 outlines these requirements clearly, and nowhere does it mandate keeping copies of personal documents. My advice: ask your preparer to provide the specific IRS regulation requiring these documents. If he can't, or continues being vague, find a new preparer immediately. You can also report suspicious practices to the IRS Office of Professional Responsibility. Trust your instincts - if it feels wrong, it probably is.

I work for a regional CPA firm and can confirm this is absolutely NOT standard practice. We have strict policies about document handling that align with IRS guidelines, and what you're describing sounds like either incompetence or something potentially fraudulent. For context, the IRS Publication 4687 (Due Diligence Requirements) that Gabriel mentioned is the key document here. It outlines what preparers need to do for certain credits, but it emphasizes verification through questioning and review - not document retention. We typically document in our workpapers that we "reviewed" or "examined" certain documents, but we don't make copies unless there's a very specific reason (like an ongoing audit situation). The red flags in your situation: 1) Vague explanations about "new requirements" 2) Inability to cite specific IRS regulations 3) Requesting excessive documentation like utility bills and report cards 4) Insisting on keeping permanent copies of sensitive documents Regarding reporting to OPR - I'd say yes, especially if you suspect this preparer might be doing this to other clients. Even if it turns out to be incompetence rather than malicious intent, the IRS needs to know about preparers who are misrepresenting requirements or potentially putting taxpayers' sensitive information at risk. You can file a complaint online at the IRS website, and it helps protect other taxpayers from similar situations. Trust your instincts here - find a new preparer who can clearly explain their documentation policies and cite actual IRS requirements when asked.

Another tip - make sure you're looking at the correct tax year's forms. Sometimes 1099-Bs include transactions from previous December if they settled in January of the reporting year. Also check if your company provides a supplemental tax document specifically for equity compensation - many do!

Great advice from everyone here! I went through this exact same confusion last year with my company's RSUs. One thing that really helped me understand the discrepancy was getting a detailed breakdown from my brokerage. Most brokerages have a "tax center" or "tax documents" section on their website where they provide supplemental information that explains how your 1099-B relates to your equity compensation. For example, my brokerage (Schwab) had a separate document that showed: - Each vesting event and the FMV on that date - Which shares were sold to cover taxes vs. sold voluntarily - How the cost basis was calculated for each transaction This made it crystal clear why my W2 (showing total vesting value) was different from my 1099-B (showing only actual sales). The key insight was that some of my "sales" weren't actually me selling - they were automatic tax withholding sales that happened at vesting. Definitely check your brokerage's tax center before panicking! And yes, as others mentioned, you'll report both the W2 income AND the 1099-B transactions - they serve different purposes in the tax calculation.

This has been such an incredible resource! I'm about 3 months into doing 1099 work as a freelance pet groomer (making house calls), and I've been keeping a basic mileage log but wasn't confident I was doing it correctly. The discussion about reimbursements vs. deductions finally cleared up my confusion - my pet grooming service reimburses me for trips over 15 miles, but I can still deduct the full mileage at the standard rate. That's a huge relief! I'm definitely implementing several strategies from this thread starting tomorrow: - Monthly odometer photos (going to do them on the 1st of each month) - Taking quick photos of client addresses/house numbers for documentation - Upgrading from my basic notebook to a proper spreadsheet with all the details mentioned - Tracking parking fees separately (some clients live in areas where I have to pay for street parking) One thing that's specific to my work - I often carry grooming equipment that's quite heavy, so sometimes I have to make multiple trips from my car to the client's house. I'm assuming this doesn't change anything about the mileage deduction since it's still just one client visit, but wanted to double-check! The audit stories shared here are so reassuring. It's clear that having solid documentation is the key to feeling confident about these deductions. Thank you everyone for sharing your real-world experiences - this kind of peer advice is worth its weight in gold!

This thread has been incredibly comprehensive and helpful! As someone who just started doing 1099 contract work for a mobile phone repair service (traveling to customers' locations), I've been anxious about getting my mileage tracking right from the beginning. The clarification about reimbursements being taxable income while still allowing full mileage deductions is exactly what I needed to understand. My company provides small reimbursements for longer trips, and I was worried I couldn't also claim the standard mileage rate. Reading through everyone's documentation strategies has given me a solid roadmap: - Setting up a detailed spreadsheet with start/end locations, odometer readings, and timestamps - Taking monthly odometer photos for backup (planning to do this on the 15th of each month) - Photographing customer locations/addresses for additional verification - Keeping separate records of any parking fees or tolls The real audit experiences shared here are so valuable - it's reassuring to know that thorough documentation really does make the difference. I was particularly interested in the tip about tracking miles between different customer locations on the same day, as I often have back-to-back appointments in different areas. One specific question for my situation: when a customer reschedules last minute and I've already driven partway to their location before turning around, is that still deductible business mileage since the trip had a legitimate business purpose when it started? Thank you all for creating such a supportive and informative discussion! This peer-to-peer knowledge sharing is invaluable for new contractors like myself.

You're absolutely right to question those calculations, Chloe. Let me break down the math more precisely: At $66k with HOH filing status: - Standard deduction: $20,800 - Taxable income: ~$45,200 - Tax liability before credits: roughly $4,800-5,200 With two kids: - Child Tax Credit: $4,000 ($2k each) - Earned Income Credit at that income level with 2 kids: approximately $1,500-2,000 So total credits could be around $5,500-6,000, which would indeed cover or exceed the tax liability. However, I agree something seems off with the employer's system showing zero withholding. Most payroll systems are conservative and would still withhold something as a buffer. Oliver, I'd definitely verify that your W-4 information was entered correctly - especially the number of dependents and filing status. It's also worth checking if there are any other factors like pre-tax deductions (health insurance, 401k contributions) that might be reducing your taxable wages further than expected. The safest approach might be to request modest additional withholding just to avoid any surprises, even if the math suggests you'll break even.

Your situation is actually more common than you might think! I went through something very similar last year when I switched jobs. The key thing to understand is that the withholding system is designed to predict your actual tax liability, not just withhold a standard percentage. With your income level as head of household with two dependents, you're in what tax professionals call the "sweet spot" where credits can significantly reduce or eliminate your federal tax liability. The Child Tax Credit ($4,000 total for two kids) plus potential Earned Income Credit can easily cover the tax on your income after the standard deduction. That said, I'd recommend taking a few steps for peace of mind: 1. Double-check that your W-4 information was entered correctly by HR 2. Consider using the IRS Tax Withholding Estimator to run your own calculations 3. If you're still concerned, you can always request additional withholding on your W-4 (even $25-50 per paycheck would create a nice buffer) The worst-case scenario isn't that bad - if you do end up owing a small amount, as long as it's under $1,000 you won't face penalties. But based on what you've described, your payroll department's calculations are likely accurate. Many working parents in your income range end up with minimal federal tax liability due to the way the tax code supports families with children.