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I am scared to death, I have been an independent contractor…

I am scared to...

I am scared to death, I have been an independent contractor for the last 6 years and have not filed any tax returns. I made approx. 45k for each of the first 5 years and approx. 85k this past year. I think. I am a separated dad with 3 children living with me and receive no support. I claim 2 of them and she claims 1. On top of this debt I will owe when my ex left she had the house in arrears and don't tell me. (She handled all the money and bills etc) I was 6 mos. behind and in foreclosure. I did a loan modification for 50k which I owe taxes on in 2012 I believe but they have never come after me for any of this. I live in daily fear of getting in trouble, losing my home, etc. I am afraid to file because they will immediately come after me for all back taxes and how will I support my kids and myself?

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

Yes the state has caught me for 2 of the older years. I paid 1 year of $3600 and am making payments on the 2nd year of 200 per month. I want to get current and get out from all this weight and stress as it is wrecking my health.

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Answered in 9 minutes by:
12/26/2017
Chad EA, CFP ®
Chad EA, CFP ®, Enrolled Agent
Category: Tax
Satisfied Customers: 1,354
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
Verified

Welcome to JustAnswer!

My name is***** am licensed by the Department of Treasury IRS as an Enrolled Agent to represent tax payers. I will be able to assist you today.

The first step is to understand exactly what the IRS has on file for you and then work to become tax compliant.

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Once we understand what is on your tax transcript we can bring you into compliance by filing past tax returns if necessary and then work on a payment arrangement if you do in fact have a balance due.

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The IRS provides the transcripts free of charge upon the request of the taxpayer or an authorized representative. Your Wage and Income Transcript includes information from several IRS forms you’ve submitted, including Form W-2, Form 5498 series, Forms 1098 and 1099 series.

____

Below is a link to the IRS "ways to get transcript."

https://www.irs.gov/individuals/tax-return-transcript-types-and-ways-to-order-them

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  • Wage and Income Transcript - shows data from information returns we receive such as Forms W-2, 1099, 1098 and Form 5498, IRA Contribution Information. Current tax year information may not be complete until July. This transcript is available for up to 10 prior years using Get Transcript Online or Form 4506-T.

Of course being a business owner, the burden of proof to provide expense information is on you.

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You are able to represent yourself to negotiate on your behalf with the IRS, but first the agent will need you to become tax compliant. Tax compliance happens when your at minimum up to date on your tax filings. Given the length of time that you have not filed, you may not need to file certain tax returns or the IRS may have filed on your behalf

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If you do need assistance with this process, as I mentioned I am licensed to assist you, but that assistance is beyond the scope of this question and answer forum.

___

I am happy to answer any follow up questions you may have through this forum.

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Again, If you have any additional questions at all please let me know! My goal is to ensure you receive 100% satisfaction.

At the conclusion of our conversation please take a moment to rate and accept my answer by clicking on three stars or more.

A positive rating of 5 stars or more is always appreciated.

Thank you!

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Customer reply replied 1 month ago
Just based off the information I have provided what can I expect to happen once I file? Is there any reasonable hope that they would reduce what I owe? I am afraid that if I file and they come after me which they will, I will not be able to support my family. This is what keeps me from filing. I am the only support my kids have.
Customer reply replied 1 month ago
Also if I request my transcripts won't it alert them and they will immediately come after me?

From what you have stated you are not in as bad of a situation as you may think.

Not filing causes more of an issue because, among other items the penalty for not filing is greater than the penalty for not paying

continued...

Chad EA, CFP ®
Chad EA, CFP ®, Enrolled Agent
Category: Tax
Satisfied Customers: 1,354
Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA
Verified
Chad EA, CFP ® and 87 other Tax Specialists are ready to help you
Ask your own question now

The request for the wage and income transcript won't necessarily tip anyone off.

The purpose of requesting the Wage and Income transcript is so you know if the IRS has filed on your behalf and what income was reported by other via a 1099 or other reporting forms.

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After you understand your tax liability, if any, you may be able to negotiate some penalty abatement.

Additionally, the repayment can be structured in a few ways. Depending on how much you potentially owe, your current cash flow, assets etc will assist generally determine your payback options.

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Customer reply replied 1 month ago
I know my contracts have filed 1099s.
I will request the transcripts and go from there. Can't keep going lime this.

The IRS generally look to match up 1099's which is why you requesting a transcript wouldn't necessarily start an audit. Not reporting 1099 income will.

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Customer reply replied 1 month ago
Ok thank you for everything.

Also know that the IRS has 10 years to collect a debt, but knowing when that 10 years starts and possibly stops is a bit tricky.

Good luck!

Let me know if you need any assistance down the road

Have a great day

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Chad EA, CFP ®
Chad EA, CFP ®
Chad EA, CFP ®, Enrolled Agent
Category: Tax
Satisfied Customers: 1,354
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Experience: Federally licensed IRS Enrolled Agent, Certified Financial Planner (R), MBA

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