In 2004 he sold a home he bought about 20 years before. He lived in and out finally, in 2003 the renters moved out and he ended up paying the mortgage until he sold it. He has not filed in 2004. With some of that money he bought a duplex and in that same year 2005 he refinanced his condo. in 2006 he sold his condo and in 2007 he refinanced the duplex. He now lived in one of the duplex by the way. I am telling him he has to pay some money back to the IRS because he sold a rental home. He lost alot of money on 2004 due to the fact that no one was living in the home and he was paying two mortages. My question is ....Is he going to have to pay a big chunck on money? Does anyone recommend a website we can visit or a phone number we can call. I told him to do the 1099 but he needed to pay off the people he owed money. This guy has not filed since 2004......Please help.
2007-07-24 10:34:26 · 8 answers · asked by Sumerblue67 1 in Business & Finance ➔ Taxes ➔ United States
When he sold the house/s, a 1099-S was issued to him and a copy sent to the IRS. You did not indicate if he received any wages or other income. It appears with the information you provided that he will be hit with a none filing penalty, interest on the penalty, penalty on the amount of tax he owes, interest on the the penalty and taxes owed.
The IRS will aggressively pursue him. I would guess this year or next year they will issue a tax lien on him, based upon their calculations of the taxes for the years he failed to filed and the the penalty and interest. This will kill his credit for ten years, and prevent him from selling and property, including autos. If he still ignores them, they will attach bank accounts and if he receiving wages--they will attach his paycheck, less $50.00. They may even seek criminal action.
Suggest he contacts a CPA or tax practitioner as soon as possible, get the tax returns filed, determine how much is owed, and set up a payment plan. If done quickly, it should avoid the issue related to tax lien. He still has time to correct this problem before it gets totally out of hand and explode in his face.
Consider not committing to marriage of this individual, until the late filing issue is resolved, you don't want to part of payment process/bad credit.
2007-07-24 11:09:12 · answer #1 · answered by oldcorps1947 6 · 0⤊ 0⤋
His best bet would be to take all his records to a good CPA or enrolled agent and have them prepare his tax returns for the missing years. Chances are that yes, he owes some money to the IRS and possibly also the state. Until the returns are prepared, it's impossible to say what he'd owe.
I have no idea what you're talking about when you say "do the 1099".
Yes, he can get into major trouble if he doesn't take care of this. At a minimum, if he owes anything, penalties and interest are accumulating every month.
2007-07-26 20:50:44 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
What he'll need to do is work with the IRS right away, or else he could be charged with tax evation. Trust me you don't want to be in that situation.
Talk to an accountant first and see what they could do. And, he may need their help in preparing his 2004 taxes (this was when the rental home was sold).
He may not owe any taxes if the he meets certain criterias regarding the rental house that was sold in 2004 (the house may qualify as his main residence, thus some of the gain he has on the house could be exempt).
The same way with the condo. Although, the condo seem to be clearly as his main residence, thus the capital gain is exempt (but you may need to discuss it with your accountant because I tell based solely on the information provided).
Bottomline is, check with an accountant (preferrably a CPA) and discuss the detail with them. He may not even need to file, but it's hard to tell with very limited detail. -Goodluck-
2007-07-24 18:13:59 · answer #3 · answered by Anonymous · 0⤊ 0⤋
I know this is a mess, but I doubt he needs an attorney. He needs to gather up all his records of transactions and go to a tax preparer. The tax preparer will file for 2004, 2005, and 2006. He can call a preparation firm, one that is open all year. There are many in all locations. There are full-time staff with a lot of experience with this situation.
He may or may not owe any tax. It is important for him to map out when he lived in each property. He may be eligible for exclusions which will reduce taxes owed significantly.
2007-07-24 21:17:01 · answer #4 · answered by ninasgramma 7 · 1⤊ 0⤋
Yes he can and will get in big trouble. The IRS does not like to be ignored. Consult a lawyer. My step-dad is still paying the IRS every month from when he didn't file them twenty years ago.
2007-07-24 17:45:22 · answer #5 · answered by *Cara* 7 · 0⤊ 0⤋
The worst thing he can do is nothing. He should contact a CPA NOW, and start getting those returns filed. The IRS will go easier if he complies voluntarily, before they have to come after him.
2007-07-24 19:04:17 · answer #6 · answered by Larah 3 · 0⤊ 0⤋
if i was in his shoes i would either leave the country or gather up all of my documents and march as fast as possible to the nearest tax lawyer. he might not owe them all that much but the fines and penalties can had up fast -- and the problem will not go away -- even if he dies someone will have to straighted it out.
2007-07-24 17:46:34 · answer #7 · answered by mister ed 7 · 0⤊ 0⤋
Can you say OUCH - the best advise i can give is simple.
GET A LAWYER!!! preferable a specialist in the tax codes. And do this like yesterday. You also might want to protect yourself, you KNOW about it.
Again,,,,,, OUCHHY!!!!!!!
2007-07-24 17:40:27 · answer #8 · answered by mhp_wizo_93_418 7 · 0⤊ 0⤋