haven't paid taxes in 2 years. Self employed for 1 1/2 of that 2 years. I don't have very good records.???

Question

due to company cutbacks, I was releived of my job at the beginning of '04. I started my own co. and kept it open for about 1 1/2 years unitl I started my new position in '06. SInce aug. of '06 my taxes have been taken right out of my paycheck. But from '04 unitl that time, I have yet to pay any taxes or file any returns. How screwed am I, and what should I do to remedy the situation? What will happen at teh end of this year if I file for '07 not having filed for 04-06?

Answer 1

Put together your info from your own co. ASAP and file the returns. If you owe taxes (including self-employment tax) from that time period interest and penalties will be owed from then. Also, if you received any 1099's from any of those years the IRS will also receive the same 1099's, and may file a tax return for you based on that info if they don't have a return from you. But, if they prepare it, it's only going to have the income, and none of any expenses you had from your business. They will then send you a notice saying that they have assessed tax, interest, and penalties against you. If you don't respond back within a given time period, they can garnish wages, levy bank accounts, attach assets, etc, whatever they need to do to collect. And if for some reason you are owed a refund for any of those years, you only have 3 years from the original due date (or 3 years from an extension) to file and claim the refund. Right now you would be fine with filing and claiming for 04-06, but after April 15, 2008 you wouldn't be able to get a refund for your 04 return.

File ASAP. Either prepare the returns yourself, or find a CPA/Tax Preparer (things should be slow now that it's after 4/15) and pay them to prepare your past returns.

The IRS will catch up with you at some time.

Answer 2

Didn't you get a W-2 for the first four months of 2004?

Legally what you need to do is to reconstruct your records as well as you can, and file for the missing years. If you don't, at some point the IRS might or might not come to you asking what happened to those missing years

In any case, at the end of this year you should get a W-2 from your new employer, and will be able to file for 2007 without problems.

What did you do for 2006? If you got a W-2, it was also reported to the IRS. To file for 2006, you'll also need as good info as possible on your self employment for that year.

Good luck.

Answer 3

Did you have any employees working for you?
Did you make excessive "profits" during that time?
Were you making large bank deposits into checking/savings accounts during that time?
Were you charging anyone sales tax or use tax?
Did you receive from any business or individual any FORM 1099 showing money they paid to you for services rendered?

If you answered "no" to these five questions, then it is very unlikely that the IRS even knows your business existed.

I am not suggesting you try to avoid paying taxes that you owe, or to avoid paying the self-employment taxes you'll be assessed when you file an income tax return. I am just making you aware of the very small probability that anything would ever happen if you didn't file anything.

If you did make "PROFIT" (i.e. income) during that time, and you file now, you will be charged the tax you owe, the self-employment tax you owe (FICA and Medicare) plus interest on the unpaid amount plus most likely a penalty for willingly failing to file.

Also, if you answered "yes" to any of the above questions, there is a chance you'll get caught eventually.......maybe.

Answer 4

Get with someone that knows. We didn't pay 3400 in taxes in 05 and now we have to pay $10,000. and counting.