How would one catch up on 15 years of back taxes?

Question

I recently took over the finances of my Dad. He's 57 years old and has advanced kidney failure.

He's self-employed and deals mostly with cash and checks. I've recently discovered that he hasn't paid taxes in 15 years. I need to get him caught up, as he's going to need Social Security benefits soon.

How would one even begin to do this?

Answer 1

Gather up all of his records, and take them to a CPA. If he doesn't have records, could be very difficult, but talk to a CPA anyway - they might find a way to reconstruct the records, but that will take a lot of their time (and therefore cost quite a bit).

He's going to actually have to PAY the taxes, not just file, for the time to count for social security.

Answer 2

You need to think this through a bit before you do anything. Lets just say that you could prove $40K net income each year. That would produce something in the area of $32K taxable income. Now proving that is going to be a pretty big job. If you did so for all of the 15 years you would owe something like $68,460 for income tax and $91,800 for self employment tax. A CPA is going to charge you something in the area of $8,000 to $10,000 to accomplish this. So now you are looking at about $170,000. Just as an example let's say that you had that kind of money and your dad has five years to live (lets hope that it is much more and you would be a better judge of that reality). If you put that same $170K in a shoe box and never collected a dime of interest you could give your Dad $2,833 a month for each month of those five years. I don't know very many folks that get that amount a month from Social Security benefits.
Before you rush out and pay a CPA or the IRS give some thought to doing "NOTHING". This will not help with his need for income but SS may not be a very realistic approach.

Answer 3

You first need to check your dad's info to see how much if any tax info he has received for each year for the last 15 years. You might also need to request a transcript from the irs for the income and deductions they have had reported to them for your dad's social security number. You also need to find out what kind of records your dad kept over those 15 years, so that you can report his income and expenses for that time period. Your best bet overall would be to take that info and bring it to a cpa. The bad part is that by being self-employed he's going to owe Self-employment tax as well as regular tax, and interest and penalties on top of the tax. You may find that 15 years worth of taxes, interest and penalties is going to add up to quite a lot.

Answer 4

Hire a CPA.

If you want to do it yourself.
You'll need to recreate the income of your Dad for the past 15 years (looking at bank statements should give you a good estimate). If your dad kept a journal of income and expenses that would also be useful.

When you file, there will be taxes and penalties due.

I would call the IRS to ask them where to get the forms for the past years tax returns at this date. 1-800-829-1040

Good luck

Answer 5

Ditto to the above. After the taxes are done, you can create a payment arrangement with the IRS if you can't pay it all at once. Just keep in mind that penalties and interest will continue to accumulate until the entire balance is paid off.