I heard some expats are going heavy into crypto to avoid reporting but that seems super risky. Isn't the IRS cracking down on that now?

Using crypto to avoid reporting is an absolutely terrible idea. The IRS has massively increased enforcement in this area. Crypto exchanges are now required to report transactions, blockchain analytics are getting more sophisticated, and the penalties for willful non-compliance can include criminal charges. Remember that crypto transactions (including trading one crypto for another) are taxable events. The IRS considers crypto to be property, not currency, so each transaction can trigger capital gains tax. Some people mistakenly think crypto is "invisible" but that's becoming less true every year as reporting requirements expand.

Whoa I had no idea about this! Is this true even for index funds that just follow something like the S&P 500 but are based in another country? This is the kind of stuff that makes me wonder if the hassle is worth it...

How do you actually prove inventory is "obsolete" though? Do you need documentation or can you just decide something isn't going to sell anymore?

You need to have a consistent method for determining when inventory becomes obsolete or has declined in value. This could be based on how long an item has been in stock (like items over 12 months old), items that haven't sold after multiple price reductions, or products that have been replaced by newer models. The key is documenting your process and applying it consistently. You can't just randomly decide something is obsolete when you want a tax deduction. Most businesses create a written inventory policy that explains their method for identifying and writing down obsolete inventory. If you're audited, the IRS will want to see that you followed this policy.

This! I learned this lesson the hard way my first year in business. Had a "profitable" year on paper but all the cash went to inventory growth. Still had to pay taxes on the profit even though my bank account was empty.

That's really helpful about the deadline! I had no idea there was a cutoff for getting refunds. Does the IRS charge penalties for filing late if you're owed a refund?

Good news - the IRS generally doesn't charge penalties if they owe YOU money. Penalties and interest typically only apply when you owe them. So if you're confident you'll be getting refunds, you should be fine penalty-wise. That said, filing sooner rather than later is always better. Besides the refund deadline I mentioned, having unfiled returns can sometimes cause issues with other government programs or financial applications like mortgages. Some people also find that their refund was larger than expected, which is a nice surprise!

I used FreeTaxUSA for a late 2020 return last year and it worked great. Super straightforward and much cheaper than TurboTax or H&R Block for prior years. Federal was free like you said, and I paid $15 for state. They walk you through everything step by step.

Hmm that's a really good point. I did get a promotion in August that bumped me from about $52k to the $58k range, so that could definitely be affecting things. Do you know if there's a good way to calculate the prorated amounts when your income changes mid-year?

You'll need to separate your income and withholding into two periods: before and after the promotion. For each period, calculate the annual equivalent of that income level (what you would have made if you'd earned that same amount all year), figure the tax on that annual amount, then prorate it for the number of months at that rate. For example, if you made $4,333/month ($52k/12) for 7 months, then $4,833/month for 5 months, you'd calculate: (Annual tax on $52k × 7/12) + (Annual tax on $58k × 5/12) = Your actual tax liability. Then compare your actual withholdings to this amount.

The IRS2Go app is really more for checking refund status than doing calculations. I'd recommend using the official Tax Withholding Estimator on the IRS website or something like FreeTaxUSA which lets you run scenarios for free.

Yeah I used FreeTaxUSA last year for a move from Washington to Texas. It worked fine for me but both states don't have income tax so it was pretty simple. I think they do handle part-year state returns but not sure how good they are with the more complicated situations.