Hey what's going on everybody? Thanks for joining me today.
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appreciate you very much, thanks for joining me again. And also
leave a comment below on your thoughts, questions, anything that you might have
for me. And if you might need help on something,
just leave me a comment below alright. So today I'm talking about
what to do if you haven't filed your taxes in
several years. And I'll break this down into different sections to help make it
easier for you to understand. So the IRS has what's called a 6 year
statute of limitations or 6 year requirement for filing taxes.
That means that if you haven't filed in 10 years, you know since 2010,
because right now it's 2020, that means the oldest four years of tax returns you
won't have to file. That means you only have to file the
previous six years. If you haven't filed in like three years,
then go ahead and get those filed and get those going. You know,
get with a professional or somebody that can help you there. But if
it's been longer than that, if it's been 6 years or more, then don't file
all of them yet okay. Don't do anything yet. Get with a professional
to help you. Either a CPA, or an EA, or tax attorney, somebody that maybe
specializes in tax resolution, they can definitely help you there. So
the reason that you should seek professional help on this
is because sometimes there are some weird things going on with your account.
Sometimes there's weird things going on with each
individual year on your account. So a tax professional can really help
clarify what those things are. And also I'll set some realistic expectations
here. So first I need to talk about tax
refunds. Tax refunds have a three-year statute of limitations on them.
That means you only have three years to file your taxes and get your refunds.
If you were due a refund back in 2015, again right now it's 2020, so
that's five years, five years ago. If you prepare your taxes
and you see that you're due a refund in 2015,
guess what you're not going to get that refund because it's past the three year
statute of limitations. Sometimes if you owe taxes in previous years
and then you file your tax this year, and your due a refund in this year,
then they're going to apply that refund to your previous year's
tax liability instead of giving you the refund.
If that's the case for your 2015 year, if you file your taxes and you're due a
refund but you owe other taxes, they're not going to apply
that refund to those other taxes as well, okay. So you you lose out big time for
not filing your taxes. One might say you threw away your shot
there. It's really important to keep up on taxes,
especially if you are expecting a refund. Don't blow it off like oh I'm not going to
get a penalty for, for not filing my taxes. After three
years, you threw away your shot, you're not going to get your refund anymore, you're
not going to be able to get a credit on your account anymore,
and then it's just lost money okay. That's
the IRS keeping your money there so that's one reason to file on time.
And you know, if you haven't filed in several years, let's say
you have that 2015 tax return and you are expecting a refund,
and you're like oh if I'm expecting a refund I shouldn't file anyway
because I'm not going to get anything back anyway. But
I would suggest that you still file because
if you were to get like a penalty in the future year or something,
the IRS wants to see all required returns
filed before they give you a penalty waiver. And I did a video on this
a week ago or so. Go back to my channel and check it out
on the IRS penalty abatement. But you need to have all your tax returns filed,
all your required returns filed in order to get
that penalty waived. So that's another another important
thing to consider. So sometimes when you haven't filed in years, some people never
get any notices, they never get anything from the IRS and
they're just you know, they're basically left alone
while other people will get notices demanding that they owe
money and requesting payments and there's all
these penalties and interests charged onto it. So what happens there
if you get a notice from the IRS demanding money and you haven't filed
taxes? What happened there is likely the IRS
filed a substitute tax return for you and this is a situation that's not good
and I'll explain that later okay. So remember that substitute
tax return. If you haven't filed in years, what are the steps that you should take?
What we would do for our clients is we would
get a power of attorney from you that allows us to talk to the IRS on your
behalf, and then we would call them, we would do
what's called a compliance check. Which you know, when we talk to the IRS
agent they just run through your account basically and let us know
what years haven't been filed, what years have been filed,
if there has been substitute returns filed, if there's been examinations done
on any of the years, all those things. They give us a compliance check
so that we have like a ground to stand on and know what to do next.
Because you know, oftentimes things situations are a lot more complicated
than just I haven't filed in years. Because if the
IRS has been doing stuff to your account then we have to,
we have to do and react accordingly and plan accordingly.
We may also find out what years the IRS don't require you to file,
or what years the IRS does require you to file. That gives us more information
on like you know, specific years to prepare
for and it could save you money. You know if you're not required to file certain
years, then we won't bother because then we
would just be charging you money to file the return when you don't need
to. So that's another important thing to find out and
after we find out that information we request what's called transcripts. So
transcripts basically are like a raw data dump
of all your income information that's been reported to the IRS, or sometimes
deductions information, like IRA deductions,
or mortgage interest, that kind of thing. If they are reported on the tax form
like a w-2 or 1099, 1098, or like 5498, those kinds of
forms, if they're reported on there that means they're reported to the IRS.
So the transcript helps because usually if you haven't
filed in 10 years, 5 years, whatever it is, you might not
have those forms anymore to file your taxes.
So having the transcripts will give us kind of like
a good outline on what we should report to the IRS on your tax return.
One problem here is that the transcripts only have federal information,
they won't have any state information. So this is important if you have W-2s
with tax withheld. You know, we can only see the federal amount of taxes
withheld. If you want to get your state amount, we
have to contact the state and that's a whole separate thing. And
you know, I'm in Colorado. I've had no problems getting that information from
the state of Colorado if I call in. If I have a power of attorney for you
that shouldn't be an issue. I don't really know what it's like in
other states. That's who you would want to contact to get that information
okay. So once you get the transcripts, we have to do a little more questioning and
we have to think a little bit more because only certain things are reported
to the IRS okay. So if you own a business, let's say
you own like a retail candy shop, no this is not a reference to 50 Cent,
but let's say you own a retail candy shop
and you know, you've had it for 5 years and you've been making money
here for 5 years. That kind of stuff might not get reported to the IRS you
know, like especially if it's mostly people
paying cash for it. If you take credit cards
then that likely will get reported to the IRS but if people are mostly paying
cash, that's not getting reported to the IRS
and so you have to go back and think about
your true income here and what's been reported to the IRS
and what hasn't. So self-employment income can be
something that's not usually reported to the IRS. However if you're an independent
contractor and you receive a 1099, that means that
income was reported to the IRS. Another thing that might not be reported
to the IRS is rental income. Now you know if you're renting out to
like just a couple or something, if you have a if you have a
condo that you're renting to a couple, it's likely that couple will not file a
1099 to the IRS to report the rental payments that they
paid you. So that's another thing where you know
you have to track that or at least dig that information up through your bank
account statements or whatever it is to find out
how much rental income you made. Also things like dependents and marital
status will not be reported to the IRS as well as business
expenses, rental expenses, and cost basis of
your fixed assets. Obviously your business expenses are not reported to
the IRS because that's just something that you incur
either through your checking account or through purchasing on your credit card.
Those are things that you have to track and report to the IRS yourself.
Which brings brings me back to the substitute tax return
that the IRS files for you. So the IRS, if you're an independent contractor
and the IRS receives a 1099 that reports all the income you made and they file a
substitute tax return well, that tax return is going to be way
off because they don't have any expense information on that
contractor income. So they're going to have all this
income, no expenses or deductions to offset it,
so they're obviously going to think that you owe more taxes than you actually do.
Which is why it's really important to file your taxes.
To report all your income, and all your expenses, and also to report your
cost basis of any fixed assets that you sell. So
that's pretty much the steps that we run through with our clients if they haven't
filed in years is, we kind of talk to them to see what's
going on, then we get their power of attorney, we call the
IRS to do a compliance check and to get
transcripts for their account okay. And then we chat
with them to see if they have self-employed income and if they do then
we've got to try to dig up those expenses and report those expenses to the IRS
on their tax return as well. If they sold a bunch of assets,
then we've got to dig up the cost basis of those assets so they pay less capital
gains than if they didn't report a cost basis
okay. And from there we prepare the returns and we
file them. And after we file them we just do
another compliance check to see and make sure that everything is current
now and everything's all good alright. So that's all I've got for today.
Thanks for joining me. If you have any questions about this
again, leave a comment below and definitely subscribe to my channel if
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