Thanks again, all. I guess that is what I’ll do – send in a check for what I can afford now. It means screwing myself for the rest of this month’s expenses as I had it down to the wire, but I have a few days at least to take care of those ones, and anyway a few days late for a bill isn’t anywhere near as big a deal.
Anyway, I should amend the OP by saying that the thought did cross my mind this year that my tax situation was different, but I just figured I couldn’t be making NEARLY enough to miss the earned income credit, so it was probably OK. I don’t know if that makes me more or less an idiot.
Well how much troubloe would I be in if hadn’t filed taxes at all in 5 years?
The first year I didn’t have enough to pay the money I owed and I had never owed before and it scared me so I didn’t file at all. The next year I didn’t file because I figured that if I filed then they would realize I hadn’t filed the year before and kick my ass. Now it has been 5 years and I know this is going to catch up to me and so I ask you, does anybody have any idea how to start fixing this problem?
I’d suggest changing your name to “Max Power” and leaving the country.
Seriosuly, there’s no nice way to go about it, just call the IRS. I am just WAGing here, but after 5 years of not filing, I’d wager you’re getting into criminal territory, not just fines and penalties (At what point does “I owe the IRS some back taxes” become tax evasion?)
If they see you’re proactive about getting straight with them, somehow it seems that should be a couple points in your favor.
Well, there are minimum limits under which you don’t have to file (IIRC and IANATL this year it’s 3500) so if you were below that for the 5 years, no problem. If not, file a return, and contact an accountant about how someone would fix the problem.
I have filed in the past without payment. It’s not a big deal if you don’t count the money you owe. Partial payments on Tax Day help, too.
I’m filing extensions this year, but in all likelihood my returns will follow in about a week. Looks like anything I might owe may be down in the noise; I thought I’d owe big time since I burned my 401(k) fund when I was unemployed, but TurboTax says I owe $3300, and I have yet to itemize my deductions and credits.
Find a good tax attorney immediately. That’s the only correct answer.
If you know anyone who has their taxes done by someone other than H&R Block or such (e.g. a CPA who performs tax services), they may be able to recommend someone.
If your lucky, the attorney may be able to get you a payment schedule and/or reduced penalties.
No, you’re not fucked. My former boss neglected to take out state taxes ALL YEAR last year and now that he laid me off I have no $$$ to pay the $1327 I owe North Carolina. THAT’S fucked. Oh well - honestly, it’s no big deal. I’m sending them all the paperwork + $500 tomorrow. In time, they’ll send me a letter stating that I still owe them $827 and I’ll have to pay penalties + interest. But I’d rather pay the P&I on $827 than $1327, so that works for me.
Whatever you do though, do file your taxes - even without a check if you absolutely must, but ANYTHING, even $50 is OK - by the 15th.
And in case you’re wondering, my former boss had these ghetto “homemade” paychecks that he printed out of QuickBooks. SSA wasn’t listed on my stubs either, but that was indeed paid, according to my W2.
Well, it sounds like Greathouse wouldn’t owe a lot of $$ “net”. So- Id’ take all my stuff down to thhe IRS- or better yet, a good EA or CPA, file it all, and see how much you owe, then work it off. You can even make an “Offer in Compromise” if you’re moderately broke.
If you don’t file? The IRS files for you. No deductions, and sometimes they add in estimated income. You end up owing a shitload. Also, they will file leins & levies, which fuck up your credit- for a loooong time. If they can show your not filing had criminal intent- you could go to jail.
No, it is far better to do your taxes yourself. The relief will be worth it. I saw some guy- he filed after 5 years, only owed $5000 in taxes (which came to something like 3X that with int & penalies). He was unemployed. He offered $1000 cash on the barrelhead (which was an effort to scrape up, but…), the IRS accepted it, and now he’s free and clear.
Forget about e-filing. Mail paper forms. There are two reasons why this is better for your situation:
First, it will take them longer to figure out you owe them money.
Second, and more importantly, you can tell the IRS to figure your tax for you. You do this by leaving the line where you calculate how much you owe blank. I don’t have the forms handy, but the instructions tell you how to do this. The IRS will process your return, note that you left the line blank, do the math for you, and send you a bill. In this case, however, they do NOT impose penalties or interest on the underpayment. This will buy you a few months to scrape up the $400.
I always take advantage of this even though I can afford to pay my taxes on time. Might as well hold onto the cash as long as possible.
The statute of limitations on a tax year where a taxpayer does not file a return never ever runs. Therefore, twenty years from now the IRS could go after you for your 2003 taxes.
You’ll go to jail. The amount of time you spend in jail will be determined under the Federal Sentencing Guidelines according to the “tax loss” you caused (there’s a schedule that says something like $X.XX = Y years).
Penalties will be imposed and interest will keep compoundng. After a while the interest (imposed on both the principal, the penalties, and old interest) will just be massively huge, and the IRS is very unsympathetic to requests to abate interest.
There is some mainstream thought that says it really is possible to just never get on the federal income tax radar in the first place, but that would require you to work in cash jobs your whole life where your employer doesn’t do proper record-keeping.
RE: what do you do if you haven’t filed for five years? Ideally, contact a tax attorney that deals with stuff like this (I’m not one of those kinds of tax attorneys).
In my Tax Procedure class in law school the prof said that in this situation he advises taxpayers to file all of their back tax returns in separate envelopes with some space in between them (so it’s not glaringly obvious what’s going on, even thought it will still be obvious to anyone that looks). Filing and paying, even though it’s really late, will as a practical matter (but not a strictly legal matter) get you out of any criminal penalties.
No offense to anyone specific, but I find some of this advice quite amusing. You are telling people who can’t scrape up $400 or didn’t file at all because they couldn’t pay to consult tax lawyers and accountants!
Yes, I know that is the best advice. You are correct. Your efforts should be appreciated. But do you really think that is realistic? The last lawyer I had to see charged me $200, up front, to basicly give me a two sentence paragraph on his letterhead.
You’re strokin’ it! Might as well suggest Witch Doctors!
“But I’ll always regret that Rwandan thing.” --Bill Clinton
Story the first: I had a friend that did not file for around 8 years. He had created his own moving business, had several trucks and employees (under the table) and was pulling down between 30 and 90 k per year for those 8 years.
After 8 years he tired of living in fear and decided he wanted to be legit. He consulted with several CPAs and maybe a tax attorney and filed for all those years with all the records he could dig up. The IRS charged some penalties and interest, put him on a payment plan, and let him get on with his life. I believe he was even able to negotiate the amount owed down through some kind of compromise program.
Talking about this with him I got the feeling that the IRS was happy that they had brought another person onto the rolls and did not want to prosecute because that would limit future tax revenue that they would collect from him. Coming forward voluntarily helped his case immensely. I also got the feeling that if they had stumbled onto him before he had filed they would have prosecuted.
Story the second: I had a year where I did not file. I did not make enough money for the year to file and decided it was not worth my time. Over the course of the year, I lived off my savings, then my mutual funds, then credit cards, basically screwing up my life for the next 8-9 years (I wish I had declared bankruptcy, my credit would have been better than me actually being responsible and paying everybody back in full - different rant). Anyway, the IRS audited me 6-7 years later because they knew about the mutual funds and some contract (1099) income I made early in the year (~$400). They sent me a bill saying I owed some outrageous amount of money and I had better pay unless I could prove differently. I filed and it ended up that they owed me money (but of course they don’t have to pay penalties and interest). It was a near thing though; I had a very hard time coming up with the documentation that I did not owe them money seven years after the fact.
While this last story seems irrelevant, it isn’t. File before they get around to you. Chances are they know who you are and have some idea about the money you made and it will be worse if they come to you (It was a really outrageous sum of money they said I owed).
Finally, please note that YMMV and IANATA,CPA,ORFWYDWYL.
Good point this. Couple of comments: I found a CPA that talked with me about my situation for about 1/2 hour for free. It was the first guy I called from the phone book. Second, the people at the IRS help line (I don’t know the phone number but I found it on the irs.gov site when I was being audited) were very helpful. It was actually due to their help that the government ended up owing me money. I am sure you could call this number anonymously and they would help you as much as they could with just general information.
I’m in a similar situation, in that I couldn’t afford to pay everything I owed. Send in everything you can, and they will bill you for the balance. As long as you send in your taxes on time, and don’t dick them around for too long with paying them back, they’ll work with you. You’ll be fine.
Doesn’t that suck? If Uncle Sam owes you money, he doesn’t have to pay interest or penalty. Basically he had free use of your overpeyment all year and doesn’t owe you any interest. BUT if god forbid you can’t pay right away, you will owe him interest and penalty! What a SCAM!
It was discovered during World War II that people will accept a far greater tax burden if it is withheld than if they have to pay it in one lump sum, as had to be done previously. Also, the government can withhold far more than your actual tax burden, and have use of that money through the year as an interest free loan to them.
Just one little accounting trick that allowed the government to waste so damn much money in the last fifty plus years.
Just so people know: yes, you are supposed to file every year. But since penalties are based on the amount you owe, if you don’t owe any money and you don’t file, then the IRS really doesn’t care. They are happy to keep your refund for as long as they can, and after 3 years, you don’t get it back anymore.
I didn’t file for 7 years. Combination of not doing it one year; continually procrastinating; losing the necessary papers, etc., then not wanting to file for one year when I hadn’t filed for the previous year. I didn’t owe any money and would have gotten small refunds ($10-$100). I did lose some money - admittedly a very stupid thing for me to let happen - but there is no penalty or anything to worry about as long as you don’t owe.
I am just a regular filer; was able to do a 1040EZ for a number of years; no funky deductions or credits, no dependents. So I didn’t raise any red flags at the IRS, although they did kindly inform me several times that I hadn’t filed and I wasn’t going to get my refunds unless I did. But nothing else ever happened. Someone who has, at some point, filed with a high income and lots of deductions might create more interest with the IRS. Piddly ol’ me they didn’t care about at all. YMMV.
P.S. I still haven’t filed last year’s return, and I won’t be filing this year’s tonight. I’m due refunds on both years so the IRS doesn’t really care. Yes, I’ll do it soon!
Might as well suggest Witch Doctors!