It's been so many years since I've filed my taxes... Please help?

Question

About 10 yrs ago or more I worked for a salon that didn't take out my taxes... At the beging of the new year I recieved a 1099 thing. Not knowing or understanding how this worked I put this off til last minute On April 13th I went to this tax person( h&r block) and was told I'm going to owe $7500 in taxes. I didn't have that & I didn't even have the $150 dollars he needed to process this. He gave me this form to fill out an extension. I filled this out my self not knowing exactly what I was doing & sent this in. Since then I worked there 2yrs longer.The jobs I've had since take out taxes but i've never filed because i'm too scared to face the financial burden. I don't know how I can pay for this. I don't have any of my tax forms from my past employers. I don't know exactly what to do because some of those employers aren't even in business anymore. What's going to happen to me? How do I make this right? What can I do? Do I need an attorney? Do I need tax person like H&RBlock?

Answer 1

First of all you should know that the IRS and probably the state you live in already 'did' you taxes based on what they received from your employers in the past. You can only ''amend' (fix) a return that goes back only 4 yrs, so anything older than that probably will be unchangeable even if you have expenses against your 1099 (self employment type) income.
Second you should find a neighborhood account and file whatever you have as soon as possible to at least try and lower 'failure to file' penalties. If you owe anything for all those years there will be interest too.
Third try and write down any expenses you may have had in doing the jobs you have done. They may be used against 1099 income to lower income taxes and social security taxes. Social Security is 15.3% because you have no employer when you get a 1099 (and also you may not have 'deserved' a 1099) and the the income tax could be another 10-15% on top of that.
Get all your papers together, try and put them in date order, and visit and accountant (not H&R or Jackson-Hewitt)

Answer 2

Well, you are in kind of a mess, but it's not insurmountable. And in the grand scheme of things for the IRS, your issues aren't really a major problem - they deal with lots of people who have bigger tax problems.

Stay away from H&R Block or Jackson Hewitt for these back years - this is beyond their line. Wouldn't hurt to talk to a CPA. You'll need somebody who really knows what they're doing for this. H&R Block are fine for routine returns, but your situation is not routine. And even after you get back on track, if you're eligible to have your return done by VITA sites (income under $38,000, and many sites shade that a little higher), go for it - they do the same thing as H&R but do it for free. Someone at a VITA site could give you advice on your current situation, but since you don't have your old forms, would probably not be in a position to do what it takes to get the last 10 years straightened out.

H&R steered you wrong in the first place. When you owe and can't pay, you should file anyway, since an extension just gives you extra time to file, not to pay - you're supposed to pay when you send in the extension form, as close to the proper amount as you know. The extension does nothing for the payment. Much of what you owed from that might have been for social security. I don't know what the rates were then (lower than now, though) - the current rate if you work on a 1099 is 15.3% of your income.

Unless you've moved around a lot (home, not workplace) I'm surprised the IRS hasn't contacted you already. They would have the paperwork all your employers sent in (1099's and W-2s) but might not have the old ones readily available. Since taxes were taken out of most of your jobs, it's possible that you were even (or close) in the other eight years, or maybe even had a refund coming. If so, you were still supposed to file, but they wouldn't make a big deal over it. Unfortunately, if you had refunds coming, for all but the last 3 years it would be too late to collect your refund, and you can't apply what you would have gotten to what you owe from that first couple years, it's just lost.

Gather up anything you still have, like old pay stubs, and talk to a CPA and see what they say. They might be able to work something out with the IRS to cut down the total amount you owe.

Make a list of your former employers, including the ones who are no longer there, and approximately how much you made from each of them, as close as you remember. Take that to the CPA too.

Do this as soon as possible. Yes, financially it will be a mess, since for at least those years when nothing was taken out, you're likely to owe a significant amount since penalties and interest have been accumulating. But the longer you put it off, the worse it will get.

Note: you don't say how much you typically make per year, or whether you're married or not. Below a certain amount that varies year by year and with filing status, you're not even required to file, although if you don't file, you don't get any refunds or credits that are due to you. If you have your info from the past 3 years, you should get those filed asap. If your employers from then are still around, you should be able to get copies of your W-2's from them. And contact prior employers for W-s copies also - will be cheaper for you to do it than for a CPA, since they'll charge you to make the contacts.

Feel free to email me if you have questions.

Good luck.

Answer 3

First of all; stay away from H&R block as they give people a two week training course and then let them send tax returns to india to be done. Suggest you contact the IRS and ask for their nearest VITA (volunteer income tax assistance) site, go there, and ask for assistance. Here is what I can give you with the info you presented. With a 1099 you have a gross amount that was paid to you. For the tax year it covers you need a form 1040, a Sch C and Sch SE (for FICA). You put the amount received as income on the Sch C and then put down your expenses, such as chair rent, supplies, advertising, utilities, business travel, anything else that is an expense of doing business. You subtract your expenses from your gross income and that gives you a taxable net income.

What you should do is put that particular item on the back burner for now. For each of the years in which you received a W-2 you should file a return as with withholding you are most likely due refunds. Try to contact the places you worked and get duplicate copies of your W-2 forms. They are required by law to keep tax records for a minimum of seven years. If all else fails contact the IRS and ask for a statement from them showing what each W-2's earnings and withholdings were. They will mail them to you. Don't wait too long as past a three year time limit you will forfeit your refunds. If you want to bounce any specific questions off me feel free; I have worked for the IRS/VITA program for 36 years. You are not in doodoo that deep, really.

Answer 4

DO NOT GO TO H&R BLOCK or any other chain tax preparation service. Most of their agents have limited training and handle basic tax returns.

As others have mentioned, contact the IRS directly. They already know that you owe them because 1099's are sent to the IRS. Then get in touch with a local CPA for help with filing a tax return for each year you missed.

Answer 5

Belive it or not, your best source is the IRS hotline. Unfortunately, your tax debt is going to be quite substantial, because the $7500 debt from 10 years ago has been accruing penalty and interest charges. Most likely that sum alone is in excess of $20,000 today.
The IRS will not prosecute you if you go to them. They will determine the total amount of money you owe them, and work out a repayment plan that will involve garnishing your wages. You may end up never paying back the full amount, however, you will at least not be constantly worrying about the registered letter from the IRS appearing that summons you to tax court.

Answer 6

First off your mistake was going to a place like HnR block. Any tax place that operates in a strip mall of all places is a sham.

Of course they said you owe $7500...they don't care what taxes your pay or what deductions they give you, they just run the numbers as fast as they can to get their $150 fee.

Go talk to a real accountant, tell him your situation, show him all you have, etc. He will inform you on how to get other paperwork,etc. Most will meet with you the first time for free.

They are more expensive than a cheap hole in the wall like a HnR block but the money they save you in taxes easily makes up the different and alot more.

Answer 7

My 2 cents - find a CPA and if you truly do not have the assets or the cash to pay off the IRS, you may have the opportunity to do an Offer-In-Compromise with the IRS where you may be able to negotiate a smaller amount due to the IRS. In order to do this, you must be up to date with your filings.

Find a CPA, quantify what you owe, and potentially go this route.

Answer 8

I'd go to HRB , Hewitt or Liberty tax and ask for help. Ask to speak with an Enrolled Agent. Or look here:

http://www.naea.org to find an enrolled agent in your area. The EA can assist you in filing your back tax returns and advise you on how to handle your situation.

Good luck!

Answer 9

Refunds prior to 2008 tax year are forfeit. If you were due a refund, there is no penalty.

Answer 10

all that stuff was filed with the feds, its buried in their databases. I have no personal experience of this, but i think it would prob be best, (unless youve got lots of assets to protect) to take this problem to the IRS itself. Yes youre wrong not to be filing but they have periodic forgiveness programs, and i imagine they would be cooperative since you are coming in yourself as opp to them catching up with you.