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Filing past years tax returns
Posted on 7/16/12 at 11:30 am
Posted on 7/16/12 at 11:30 am
My girlfriend has a sole proprietor DBA business and has not filed taxes since 2004. She has gotten everything together to file. She is afraid of criminal action by the IRS if she files. I told her that I think if she went to the IRS and laid her cards on the table, the IRS would work with her, although she would still owe the money and penalties. She doesn't have the money to hire a CPA or one of the firms that advertise on the radio or TV.
She owns a small service providing compnay doing all the work herself, so no employees, just supplies, business phone, used her personal vehicle for going to her jobs, which she has logs for mileage. Her gross revenue was between 20-40K depending on the year, so we're not talking major tax work.
She is starting a job working for someone in a different industry and wants to get these returns filed ASAP, as she doesn't want to deal with this after she starts her new job as she will be on a steep learning curve in this new industry.
What would the tax experts of the MT recommend to her on how she should proceed?
She owns a small service providing compnay doing all the work herself, so no employees, just supplies, business phone, used her personal vehicle for going to her jobs, which she has logs for mileage. Her gross revenue was between 20-40K depending on the year, so we're not talking major tax work.
She is starting a job working for someone in a different industry and wants to get these returns filed ASAP, as she doesn't want to deal with this after she starts her new job as she will be on a steep learning curve in this new industry.
What would the tax experts of the MT recommend to her on how she should proceed?
3
Posted on 7/16/12 at 11:34 am to doublecutter
I don't think there's any way not to hire a professional
Posted on 7/16/12 at 11:52 am to doublecutter
does she really need to go back that far? I thought they only looked 3 years back?
Posted on 7/16/12 at 1:55 pm to doublecutter
You really need to seek professional assistance. There were special provisions for Katrina victims that should apply to your girlfriend. Taking advantage of them might enable her to get out of her situation at a very low cost.
What is probably going to occur is that she will owe little or nothing in income tax, but she will have some unpaid self-employment taxes. You will want to claim as many expenses in 2004 and 2005 as possible to reduce the net income from the business to as little as possible. The reason for this is that she has no payments or credits to cover any unpaid taxes for those yeears. Beginning in 2006 there were various credits that were available to offset any taxes she owed.
What is probably going to occur is that she will owe little or nothing in income tax, but she will have some unpaid self-employment taxes. You will want to claim as many expenses in 2004 and 2005 as possible to reduce the net income from the business to as little as possible. The reason for this is that she has no payments or credits to cover any unpaid taxes for those yeears. Beginning in 2006 there were various credits that were available to offset any taxes she owed.
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