I did not file taxes for 2001 and 2002. I owe taxes for stock sold. Should I consult a tax professional?

Question

I sold some stock in 2001 and 2002 and I failed to file my taxes. I have received my tax refunds for the years filed aftwerwards. I sold some short term gain stock those years, and I had very few possible deductions at that time. It is looking like I owe quite a bit of $$ for interest and penalties. I am capable of filling out the standard forms, but not calculating the interest/penalties. Should I consult a tax professional? Will a professional be able to do anything that may help reduce my amount owed. I don't want to make this more costly than it already is.

Answer 1

Yes. And do it right now. I didn't pay taxes for a couple of years because I didn't have the money. A couple of years passed and then they sent me a bill for that and penalties. It was in the thousands. I talked to a tax person and they saved me about 30% of what I owed. It was definitely worth it.

At first I felt a little guilty and embarrassed, but better that than going to jail for tax evasion.

Answer 2

You should absolutely consult a tax professional. You should have that person get your tax information not only from you, but from the IRS as well.

If you had other stock losses, those could be used to offset some of the gains. There is also your standard deduction or your itemized deductions and your exemptions to consider.

The IRS will calculate the penalties and interest, but a competent tax professional can look for ways to reduce the penalties and to look for other deductions to help you lower the amounts owed.

I would do this as soon as possible to avoid even more penalties and interest. It is better to file and beg forgiveness than to wait until you are caught.

Answer 3

Because you did not file a return for those years there is no statute of limitations running. This means that they can contact you at any time for these returns.
If the return is that simple you could simply file the returns pay any tax due and the service will send yo a bill for penalty and interest.
If you think there may be a way of saving tax you might complete the returns yourself and then have a CPA look them over to see if there is anything they would suggest that could save you taxes. This would be less expensive than having them prepare the returns from scratch.

Answer 4

Consult an attorney who specializes in US federal income taxes. A tax preparer can figure out what you owe in taxes, interest, and penalties. But he can only tell you the amount owed. He won't be able to do anything about it.