What to do if never filed Taxes?

I’ve never filed a (federal) tax return before. Do I need to file now? If so, how do I do that?

You must file a federal tax return if you owe federal income taxes, and you should file if you had taxes withheld (since you might get some or all of them refunded). How do you know if this applies to you?

If you were paid with regular paychecks (so-called W2 income) with taxes taken out, you should file, regardless of how much you made, or whether your parents claim you as a dependent. Filing will not affect their ability to claim you. You must file if your income as a single person was over $10,300. If your earned income was less than the standard deduction, then you would not be required to file. Usually it’s a first full time job out of high school or college in which you will earn more than the standard deduction. If you are a standard wage earner and you properly filled out your W-4’s where ever you worked, then you probably were due a small refund at the end of the year. If you haven’t filed in a number of years, then any refund due to you will be lost because the IRS will only allow you to go back 3 years in claiming a refund. The IRS however can come after you for any years you did not file a tax return. Failure to file is a criminal offense. You should go back and file your prior taxes even if you were due a refund and know that the IRS will not be refunding it.

If you were paid without any taxes taken out, e.g. in cash or otherwise as a so-called 1099 employee, you need to file and pay taxes if you made at least $400. These “self-employment” taxes are more complicated, so be prepared to learn how those work. Once you are in compliance with filing all of the delinquent tax returns, the tax professional can determine how much you owe, including penalty and interest and then analyze your particular situation to determine an appropriate resolution. There are 3 primary methods of resolving collection cases: Offer-in-Compromise; installment agreement and Currently not Collectible, commonly referred to as hardship. An experienced tax professional who specializes in collection matters will explore all options and be able to recommend a solution to your tax case. You can get more information from my website.

To file your taxes, you have a few options: you can pay someone to do it for you (probably $100+), you can do it yourself using the paper forms, you can use an online site, or you can download tax prep software. Some of these options can be free, especially if you have only typical income levels and “tax situations”, e.g. no dependents, and only W2 income. Take a look at the links above in the help section for some pointers for how to get started. You will want to have your W2/1099. It should take less than an hour. Good luck!

(This covers only federal taxes. If you are in one of the 43 states with a state income tax, you will also need to look into those. That’s every state except Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.)

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