Big tax blunder question

[kyllev75]

Wondering what my best path forward is, here's the boneheaded moves I made to get here.

2019 taxes prepped using turbotax.  Wife lost her job in 2019 while paying off a 401k loan.  We couldn't afford to pay it back, so it was defaulted and counted as income.  With the penalty, tax burden was over 8k.  I don't have the money to pay it, so like an idiot, I didn't file them.  Researching the penalties, it looks like I can add at least %30 in fees and penalties.  

I never received my last 2 stimulus checks, but when I do file my 2019 taxes, it will place me outside the earning limit to get that check (the $600/family member stimulus).  I didn't recieve my $1400/family member check either, I'm guessing because I didn't do my taxes.

Background out of the way, what's my course of action?  Submit my 2019 taxes like I should have, then do my 2020 taxes with the latest turbotax program?  Any advice or suggestions is greatly appreciated.

[JotikaT2]

Yes, you should file your 2019 tax return as soon as possible.  Please see the link below to access the TurboTax software for 2019.

Prior-year tax return information

If you are still unable to pay the full balance due, you can apply for a payment plan with the IRS.  

You can set up an installment payment plan with the IRS.  When you get to the File section in TurboTax, you will be asked how you want to pay your taxes due.  You can select set up an installment plan with the IRS.  Answer the questions as prompted and your installment plan request will be submitted when you file your return.

How to set up an payment plan within TurboTax

If you do not want to do it through TurboTax, you can do it online through the IRS.  See the link below for more information on how to do this.  

Options to set up a payment plan 

IRS site to apply for installment plan or change an existing plan 

You should also file your 2020 income tax return and indicate you did not receive either of the first two stimulus payments.  You may be able to claim the Recovery Rebate Credit on your 2020 tax return.  

The amount of the Rebate Recovery Credit is based upon your actual 2020 income tax return you file.  Therefore, if you meet the criteria for the credit, you will receive it when you prepare your 2020 income tax return.  The credit is intended to give those who should have received a stimulus payment but never did a tax credit on their tax returns.  Any excess credit is then refunded to you if there is an overpayment on your tax return.

Recovery Rebate Credit eligibility