My neighbor just told me he has not filed taxes in 3 years?

Question

Just now he decides to be worried. Says he is not sure he can even find much of the paperwork, w-2's I assume or whatever. What can he do? Should I tell him to call the IRS directly and work something out or what? This guy has kids and doesn't he risk going to jail for this? We are not talking about a rich guy here either.

I forgot something. He has been on disability for three or four years I think and it has been for depression. Is there mercy in the IRS for mental disease?

Answer 1

If his only income has been SSI disability he has no tax liability and does not need to file.

If he has other income he'll need to download the instructions for the missing years and see if he even needs to file. If his income is below the filing requirement amount, again there's no need to file though he may be cutting himself off from any refunds or possibly the EITC if he's eligible.

He would only be looking an any chance of jail if he repeatedly failed to respond to IRS requests for payment or to file a tax return. Even then, that is only reserved for the worst offenders -- the IRS would rather you be on the outside earning something that you can pay the debt with.

Answer 2

He may be worried about nothing. Unless the law has changed disability income is not considered taxable income by the IRS. If there is income that is taxable he would be entitled to CTC and EIC which could mean refunds in the thousands of dollars each year. Tell him to not procrastinate though as there is a three year limit beyond which he will forfeit refunds. If he can't find his W-2's for work done then he should contact the employers and ask for a copy of same for each year involved. If he was on disability and got no W-2 then it is because disability is not taxable and isn't even reported.

Answer 3

there are many options for settling back taxes, the worst way is no communication. At this point he should make contact with IRS customer service and request his options. No he will not go to jail. He will pay late fee's and interest on anything he owe's. He may even just get a repayment plan. The IRS can figure out from past reported wages a basic return but he will loose many deductions that way.

If he keeps ignoring it, then he can at some point loose property, face garnishments, and court actions to collect. It is better he makes the first move for resolution.

Answer 4

Have him talk to a CPA to start. A professional can determine fairly quickly if he is even required to file a return. If he is required, the CPA will let him know what the next steps are. Like another responder said, he may not even need to file, and therefore is worrying about nothing.

Answer 5

Yes better to step up and admit it and say he wants to fix it with the IRS to get it all straighten out instead of them coming down their to arrest him. He will be assigned someone from the IRS who will walk him thru it

Answer 6

He should call the IRS right away and explain. Yeah they will not be happy but they will not be happy if he does nothing and sweeps it under the rug. And he can go to Federal Prison for this.

Answer 7

I hear its no good to file it anymore cause it gets took from you I know 2 people it was took but I forgot the exact reasons, anyway maybe he needs to leave that junk alone as johnny cash says. Over all that song fits just about all my moves & moods.''

Answer 8

If he doesnt want to be caught right now, I would advise him to call the IRS from a payphone (NOTHING REGISTERED TO HIM) and explain his situation and see what advise they can offer him....and go from there.