Personal Taxes

Haven’t Filed Taxes? Four Different Non-Filer Scenarios and Solutions

As accountants with a focus on people and businesses who haven't filed taxes in a long time, we field a lot of different questions from people who haven't filed in three, eight or even 20 years. Here are a couple of condensed examples of emails/calls from people just like you and how we've responded.

I'm a 48 year old self-employed carpenter and haven't filed federal taxes in 20 years. How do I handle this?

Due to your age and proximity to retirement and also the fact that you might qualify for an Offer in Compromise (OIC), we would recommend that you file as many tax returns as you feasibly can—probably on the order of six to ten returns.You will owe a lot in taxes ($50,000 to $200,000), but because you meet the criteria for OIC above, you should settle the debt for a reasonable amount ($1,000 to $5,000). By settling with the IRS, you will also restore your Social Security credits at a substantial discount. With retirement closer, these restored benefits will be a big help as you reach 62 years to 70 years and get Social Security. We would first research your IRS record to get transcripts, do the returns, then proceed to an OIC.

I haven't filed in 7 years after getting divorced. I am a wage earner and have had various jobs.

You will only qualify for tax refunds in last four years, and we would recommend that you focus on filing 13, 14, 15, and 16 only. We will get your transcripts and verify that the IRS isn't looking for 2009 to 2012 and then do the four returns. We will emphasize filing 2013 as soon as possible before April 15, 2017 as you will lose that refund after that date.

My Mother died in 2014. I am responsible for her estate. I don't think she filed the last couple of years of returns.

Heirs can be made responsible for deceased people's tax debts, so we would first research your Mom's record with the IRS to get the transcripts and determine what needs to be done then file her returns to clear her record.

I am a 42 year old self employed physician who hasn't filed in 8 years.

If you can full pay what's owed in 2014, 2015 and 2016, we're going to recommend that you file these returns, pay what's due and move on. Had you qualified for an OIC we probably would have recommended the strategy for the carpenter above, but due to your high income and inability to qualify for an OIC, we recommend filing recent returns and paying what's due plus penalties/interest. If our research would find that the IRS was looking for more returns than this, we would advise otherwise. Part of the reason we're recommending the focus on 14 to 16 only is that the IRS's system of monitoring unfiled tax returns broke down in 2013. As licensed tax professionals we're required to advise people to file all missing returns, but we ultimately base our advice on what the IRS is looking for. If they're not looking for returns, we advise a more minimalist approach.

Is 2024 the year to solve your tax issue? WATAX is ready to assist you now. Please call us at 1-888-282-4697 or email us a description of your tax issue and we'll contact you promptly.

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