I am sure I won’t solve this here, but I would like to have some leads to get myself organized.
I do want to solve this and just want to be a regular citizen with the tax up to date. I will mention the same as another member did:
“I KNOW I’M SUPPOSED TO FILE EVEN THOUGH I DON’T OWE, BUT I’VE ALREADY ADMITTED THAT I HAVEN’T SO WE DON’T NEED TO ADDRESS THAT ISSUE. THANK YOU FOR FOCUSING ON THE QUESTION I’M ASKING RATHER THAN TELLING ME SOMETHING I CAN NO LONGER DO ANYTHING ABOUT.”
It is somewhat complex:
1- I have not filed tax since 1999, although I estimated (at the time) and saved what I thought would be the tax.
2- 1999 to 2001 I started to play “entrepreneur” as everyone was doing when the Internet came about, selling junk on the Internet
privately. money was exchanged back and forth without any actual control
The IRS sent me a letter to pay taxes not filed for a student loan that I cashed(2001). The total still is unpaid. I am guessing this is because the bank reported to the IRS, yet only the loan was mentioned.
3- I had a job that issued me a W2 form 1999-2001 “self employed” , in 2000 I started paying free lancers to do the work I did, I wanted to keep the job in case the business did not do well, however these free lancers were not regular workers, I never issued any I-90 or anything that would help me to track any of these payments, except the employer
being my witness I have only dates amount and first name of the freelancers, no other proof. Unlikely I can track down must of these people All payments were cash. The only ones I was able to track down were unwilling to provide personal information for I-90, yet they only make up 20% of the total.
Is this case lost? Do I have to pay tax on what I kept?
4- Mid 2001 I incorporated had a tax payer ID issued by the IRS, that’s where the major mass began. I mixed personal banking account, personal phone line and credit card to pay suppliers with business. Although I was able to separate accurately all the personal expenses and even the % that was business versus
personal. I am not sure how to separate the business.
Since I incorporate the business mid 2001 and I was already playing business man since 1999…I am unsure how to go about it. Do I have to separate them?
But I have invested money on equipment prior and after incorporation to be used for business purpose, same for goods bought for sale.
5- From 2000-2001 I had an ex girlfriend taking care of all the paper for me. She was being paid to enter itemize every single item. In the end she took the money but did not do the job, actually the opposite, she only mixed up all the papers (receipt, bank statements etc) into a huge mess stuck in boxes, which took me one month to put in order again.
It is not clear if the company made any profit or not, unlikely it did
6- Late 2003 early 2004 a live in girlfriend, took over the function of organizing all the papers, things were going really well, all papers had been organized, everything was being entered to a spreadsheet in the minimum details, till I found out that instead paying the bills she was pocketing the money, overnight she took her things and all the computer files, so months of work went back to the “starting line” again.
Without the money to pay the bills the business could not survive, I still tried to save it by taking money from credit cards to cover holes, but eventually I ran out of Credit cards.
After all these I could never put myself together again, I started drinking which I had never done, stopped paying all the bills, my credit rating was excellent went below miserable. I did not make any significant money from 2004 – 2007, if I did make any it was cash and way to low, I borrowed money from friends and family which eventually I will have to pay.
—–State tax was collected for some of the sales, yet without the information that was stored in the Hard drive of the computer that was stolen by my ex I am unable to have accurate information. Not all sales were taxed as the majority was sent to out of the state. It is useless to ty to track her down as she moved to another country and has been bouncing from country to country, and I know this information was purposely destroyed.
I was living in a room and board such a situation, I did not have to pay for living expenses.
7- Is borrowed money considered a taxable income?
8- My mother helped me from 2004-2007, although I am a full grown adult and I was not living with here, am I able to claim I was a dependent during these years? although she did not file me as a dependent. I did make less than k a year.
This tax mess was never cleared, but this year I took care of the depression and stopped hiding behind alcohol. I am here to face the cosnequences.
I am working on the paper work, yet I am not sure how to address these problems.
9 – I know I will need a CPA to straight this out and I am planning to do it. Any CPA out there can guesstimate what this would cost? I will borrow this money to pay an expert.
10- Let’s presume that the IRS and the State will negotiate any amount I may have to pay, also the fact I am not employed at the moment, how likely is it that the amount can be negotiated to a realistic value that I can pay?
Thank you very much
You really do need help. The IRS will someday catch on that you had self-employment income and then they will look at the following:
1. Estimate your income from your records as well as from your lifestyle. Any money coming in will be cosidered to be income.
2. Make you document the money paid out.
Since you paid money out without getting any information from the payees (first name is not enough) you won’t get to deduct it. You should have required each individual to give you a signed W-9, BEFORE you paid them. Even if you had their name and address, lack of the SSN would actually required you to withhold 30% and send that into the IRS to ensure they paid their taxes.
As soon as you incorporated, you were liable to file an 1120 each year.
First let me say that I think it is wonderful that you have turned away from the alcohol & depression. It sounds like its going to be alot of work just to sort all of this out. Went through a similar situation when I met my husband- he had not filed for 10 years although if he had he would have received refunds! Tax attorney went back 6 years- during which time he was a 1099 sub contractor. Basically had no clue what he had earned. Pretty much had to plead for mercy with the IRS. He owned an RV which we sold & did a settlement & compromise with the I.R.S. Best of Luck, I feel for you. You may want to stop with the live in girlfriends for bookeepers!
Well, you’re right that you need some professional help to get this sorted out. You can help (and lower the cost you’ll pay the CPA) by writing everything down you can remember, year by year, for that time. And gather any records that you do have, and be sure they are organized.
Loans, or help from mom, are not considered as income so that doesn’t get reported. There’s no advantage in trying to claim you were a dependent – that doesn’t save you any taxes, and the only result it could have is to make you owe more.
If the IRS already billed you for some of the time, that amount is still sitting there, increasing due to penalties and interest.
Good luck.
you better just disappear – you’re probably looking at heavy fines and possible jail time
I recommend getting ahold of a professional who can advise you of the correct way to proceed. There are several legal advisors who specialize in tax law. Make sure you ask them about the “Offer in Compromise” opton and whether or not you are eligible. It can save you literally thousands of dollars in back taxes, fines and penalties. I wish you the best.