We find that taxpayers do not file tax returns for one or more years for various reasons such as missing records, personal hardship or just simple neglect. This can overwhelming. Fortunately, there are ways to approach the problem of unfiled returns. Here are a few things you should know about getting current with your unfiled returns.
Gathering your information
- If you don’t have your documents, you can get IRS transcripts that will show what has been reported to the IRS – this will be a comprehensive listing of the 1099s and W2s that were sent to you. This cross-checks against your own records, filling in for anything that is missing. The IRS transcripts are a checking point – if there is income you earned that is not on the transcripts, best efforts need to be taken to determine that income and include it on your return.
- If you are self-employed, business income and expenses need to be determined. Income can be pieced together by several methods, including 1099 reporting to the IRS (supplemented by any income not reported), or your total bank deposits.
Paying What you owe
- If most of your income is on a W2, you may be due refunds. The IRS only allows you to collect refunds from the last three years so getting up to date is important.
- If you find that you owe money, you should still file the return.
- The only way to settle a tax debt is to first have the IRS recognize it with a tax return.
- An IRS Offer in Compromise allows you to negotiate with the IRS to come to an agreement on a reduced amount of the tax liability that will be paid over a period of twenty four months or less.
- An Installment Agreement is where you negotiate a monthly payment that you can afford. Many times, you don’t end up paying the debt in full because the time the IRS has to collect the debt expires.
Substitute for Return
- Sometimes, when you don’t file a return, the IRS files one for you. Most times, an IRS substitute for return gets it wrong, charging you for income that was reported on W2s and 1099s but not giving you any deductions or exemptions. You may already have a bill from the IRS from a Substitute for Return. These estimated returns can be corrected with perhaps a lower tax liability by filing an original return.
My Fiscal Office can get your unfiled returns completed and can help resolve your outstanding tax liabilities. If this is your year to your taxes in order, contact us at https://myfiscaloffice.com/connect/
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New York, NY 10012