self employed and have not declare taxes since 2004 what can happend ? what is the way to solve this problem.?
2006-07-26 04:51:52 · 17 answers · asked by SHARK 1 in Business & Finance ➔ Taxes ➔ United States
Obviously I’m doing this question for someone else lol , by the way this person is paying Installment Agreement, from 2003
2006-07-26 05:17:35 · update #1
the odds of being audited are about 1 in 200. and they have 6 years to do that.
If you haven't paid taxes at all on your income then you should probably do that before its too late and pay the interest. If you have had deductions and are owed a refund but chose not to file and pursue that, the irs won't complain that you've given them extra money.
oh...and if you report someone to the irs for tax evasion and they collect, you get a certain percentage :-D
2006-07-26 04:57:05 · answer #1 · answered by mackdaddy_mc 2 · 0⤊ 0⤋
Wow the other answers here are scary.
Here's the truth.
Your friend should file for 2004 and 2005 at his earliest possible convenience. The IRS has no way of knowing whether he owes taxes or not. Why? As a self-employed person, he has to report his business income and business expenses and then figure his tax. Only he can do this.
Also, if he has an Installment Agreement, the IRS might decide to revoke that. Technically, in order for an IA to be valid, the taxpayer has to file all missing tax returns. I would hate to see him lose his payment plan, so again filing the returns at his earliest convenience would be in his best interest.
Finally, he's not going to jail, doesn't need to flee the country, or hire an attorney. He should hire a competent, experienced, and trustworthy tax accountant. Someone who understands back taxes and is willing to help him stay current on his taxes.
My article below is about filing back taxes. It's not that hard. They key is getting organized, selecting the right tax professional, and staying calm.
All the best.
2006-07-26 12:42:26 · answer #2 · answered by wperezsf 2 · 0⤊ 0⤋
The IRS can come to your house and start just taking your stuff. Everything that isnt necessary to do your job. I had a friend who didnt pay taxes the whole time she was married like 5 years and then one day they sent her a letter saying she owed on back taxes. A week later they were at her house took her tv the nicer one of her two cars and everything else but her clothes. You need to file ASAP here is the best place to start
http://www.irs.gov/businesses/small/index.html
http://www.irs.gov/businesses/small/article/0,,id=115043,00.html
IF you make more than 400 bucks or more a year you gotta file man dont end up like Willie Nelson
2006-07-26 11:59:30 · answer #3 · answered by Marcus W 1 · 0⤊ 0⤋
Self employed persons do not have to make a profit for the first 5 years.
....come up with as much of "legitimate" expenses you have and file for 2004, and 2005 as you do not need to pay quarterly taxes unless you have more than 1 employee. (this does not include if you hire sub-contractors as they are responsible for their own taxes).
...Most people do not owe any taxes when they first become self employed as you do not pay taxes unless you make over approx. 20,000 Net..(after expenses amount)
...File, it will save you the aggravation of an audit, and you may want to have a CPA do it for you so it is done correctly...god speed.!
P.S. if you do owe, they usually will allow monthly payments and if the government did not find this out on their own, they usually will "wave penalties" but you may have to pay interest if you owe.
2006-07-26 11:58:42 · answer #4 · answered by Rada S 5 · 0⤊ 0⤋
Remember Richard Hatch from Survivor?? He was just sentenced to 51 months in prison for not paying taxes on his winnings......Get your stuff together, see an acct, file and get caught up. You're gonna pay some penalties, but it's probably better than prison. You can arrange payments with the irs if you can't pay what you owe all at once.
2006-07-26 12:06:26 · answer #5 · answered by dayner 2 · 0⤊ 0⤋
If they owe you there usually isn't a penalty so I would sit down and figure them out and send them in. But if you have not paid into them then I would look up and see if I fell in the line of not enough to have to declare taxes. Poverty level so to speak. Then I would still send them in showing I owed 0 at least they cannot penalize you for that. Periodically there is a commercial that says settle for pennies on the dollar after figuring out your taxes that might be your better bet. But you have to figure them out first before good guidance is really possible:-)
2006-07-26 11:58:17 · answer #6 · answered by Anonymous · 0⤊ 0⤋
I run my own business and file a tax return every year. You can still file tax returns for the years you haven't. It will cost you less if you correct it know than to have the government come in and do a complete audit.
2006-07-26 11:57:38 · answer #7 · answered by Renee B 3 · 0⤊ 0⤋
They need to file their taxes and start making payments on that. another thing that they can do in the future to keep from getting behind is to make estimated payments and then, if they pay in enough, they should get money back at the end of the year.
2006-07-26 13:17:56 · answer #8 · answered by RainCloud 6 · 0⤊ 0⤋
you're in deep do-do. Remember what happened to Willie Nelson? This is a serious problem. Contact a lawyer ASAP. You may not be caught this year, next year, or for ten years, but you WILL be caught, and the longer you wait before doing something about this, the harsher your punishment will be.
2006-07-26 11:55:50 · answer #9 · answered by munesliver 6 · 0⤊ 0⤋
audit... major. Call the IRS and you may be able to work out a pay plan to pay back taxes. Good Luck.
2006-07-26 13:43:44 · answer #10 · answered by kitkool 5 · 0⤊ 0⤋