With the first stage of the tax season behind us, here’s WATAX’s lessons about getting into basic tax compliance in 2023.
Six year window of compliance or 2018 to 2023 is still ideal. By doing six years, you’ll avoid the IRS from asking you to fill in any of the gaps and/or prevent them for filing for you and creating unnecessary tax liability.
Pandemic Stimulus payments still live. With 2020 2021 being the most important years to file, particularly for married filing joint/single folks with income South of $150,000/$75,000, pandemic stimulus payments are still out there at $3200 per individual (including dependents).
Going beyond six years of compliance? Only if you are nearing Social Security age (62 to 70) should you go beyond the six year window. Many self employed people might try to file a bunch of years, 7 years plus, owe a ton of tax liability particularly for Social Security/Medicare taxes (15.35% of business profits), and then make a settlement on that tax debt with IRS, restoring your Social Security payments at a big discount.
