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Level 2
February 29, 2024
Question

How to clear up back tax issues?

  • February 29, 2024
  • 9 replies
  • 71 views

I am trying to help a friend out of some financial difficulties and one of the things we have to deal with is back / unpaid taxes.  She filed a return, owed money which she couldn't pay so then stopped filing for the next 2-3 years.  My questions are -

 

1. For Tax Year 2023 can I just TurboTax to file as normal though a couple of years have been skipped?

 

2. What do I have to purchase to file previous years returns?  Do I just file them as usual also?

 

3. How do we find out what she currently owes the IRS?  None of this is crazy but it is to her, she is low income and might owe a total of $1,000.00 or something which I can handle just not sure logistically how to attack.

 

4. Is this possible to do ourselves or should we be going to a tax service / attorney?  Seems like we should be able to knock it out quick, all she has are W2's and a child there are not mortgage deductions, investments, or anything complex.

    9 replies

    Level 15
    February 29, 2024

    1.  You can use TurboTax to prepare and file 2023.  Each tax year is separate.

     

    2.   Read information in detail below----there is separate software for each tax year.   Past year software must be used on a full PC or Mac, and the returns must be filed by mail.  They cannot be e-filed.

     

    3.  You find out how much she owes by preparing tax returns.   And...if she owes tax due, there will be penalties and interest for which she will be billed by the IRS.  The software will not calculate the penalties and interest.

     

    4.   If she has all the W-2's, etc. needed, she can do it using the software for each year---at least going back as far as 2020.   A 2020 refund will be forfeited if that return is not filed by April 15, 2024.

     

    What if I do not file my tax return?

    https://ttlc.intuit.com/questions/2572308-what-happens-if-i-don-t-file-my-taxes

     

    Check for IRS transcripts to see the last year the IRS shows a tax return for her.

    https://www.irs.gov/individuals/get-transcript

     

     

     

     

     

    Each tax year has to be filed separately using the forms for the specific tax year.  They cannot be combined in any way--do not even put them in the same envelope when you mail them.  Software for past years is available back to 2020.  Any earlier years can only be prepared on paper forms by hand--and those refunds have been forfeited now.

     

     

    It might be better for you to seek local paid tax help in a situation when you are several years behind in filing your tax returns.  Do you even have all of the documents you will need to enter and show your income—like your W-2’s and any 1099’s?     There are ways to get W-2 information or to get 1099's if you need help.  

     

     

    You cannot change the tax year.   The current online program is for 2023 only.   Only a 2023 return can be prepared online and only a 2023 return can be e-filed.

     

    Online preparation and e-filing for 2020, 2021, and  2022 is permanently closed.

     

    To file a return for a prior tax year

     If you need to prepare a return for 2020, 2021, or 2022  you can purchase and download desktop software to do it, then print, sign,  and mail the return(s)

    https://turbotax.intuit.com/personal-taxes/past-years-products/

    You may also want to explore purchasing the software from various retailers such as Amazon, Costco, Best Buy, Walmart, Sam’s, etc.

     

    Remember to prepare your state return as well—if you live in a state that has a state income tax.

     

    https://ttlc.intuit.com/community/state-taxes/help/how-do-i-contact-my-state-department-of-revenue/00/25573 

     

    When you mail a tax return, you need to attach any documents showing tax withheld, such as your W-2’s or any 1099’s.  Use a mailing service that will track it, such as UPS or certified mail so you will know the IRS/state received the return.

     

    Federal and state returns must be in separate envelopes and they are mailed to different addresses.  Read the mailing instructions that print with your tax return carefully so you mail them to the right addresses.

     

    Note:  The desktop software you need to prepare the prior year return must be installed/downloaded to a full PC or Mac.  It cannot be used on a mobile device.

     

    If you are getting a refund, there is not a penalty for filing past the deadline.  If you owe taxes, the interest/penalties will be calculated by the IRS based on how much you owe and when they receive your return and payment. The IRS will bill you for this; it will not be calculated by TurboTax.

     

     

     

    **Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
    Level 15
    February 29, 2024

    Another place to look for information:

     

    https://www.irs.gov/payments/your-online-account

    **Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
    Level 15
    February 29, 2024

    Some other points-----You mentioned that your friend has a child.   If she did not receive stimulus checks for 2020 and/or 2021, she needs to use the recovery rebate credit in Federal Review for those tax years in order to get stimulus money for herself and/or the child.

     

    For 2021, the child tax credit was a higher amount and she did not even need earned income to get that child tax credit, unless the child was older than 17.    The child must have a SSN.   

     

     

    The refundable credits that your friend may be eligible for may make this much less dire than she imagines.   It is great that she has a friend willing to help her sort this out.

    **Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
    Mike9241
    Level 15
    Level 15
    February 29, 2024

    just a potential warning. her tax bill may be way more than the $1000.   failure to file imposes a 25% penalty (5% for the first 5 months late) on the amount due after that the penalty is .5% per month.  Then there are the interest charges. using a tax pro is expoensive even though they probably can get the bill reduced but the  bill may be as much or more that the reduction. if she can't afford to pay you might want to look into offer in incompromise.

    https://www.irs.gov/site-index-search?search=offer+in+compromise&field_pup_historical_1=1&field_pup_historical=1  

    Mike9241
    Level 2
    February 29, 2024

    Ok I have some clarity thanks to IRS website and TurboTax, can you suggest best path forward?

     

    2020 - filed, accepted and refund no issue

    2021 - she did not file at all, everything is done just not filed.  $1,400.00 is owed because company she worked for took zero federal taxes out of her check

    2022 - filed, accepted and refund no issue

    2023 - based on here W2 and same issue of company taking zero federal taxes out she will owe $2,000.00 for 2023

     

    Is it legal for companies to do that?  Its literally zero federal tax withheld.

     

    I plan to file 2023 online without paying right away as well as mailing in 2021 again without the payment, do you suggest I use the 656-L form for one or both of these years?  I know employee should notice no federal tax is being taken out but this has to be illegal since employer is then no paying the matching taxes?