M32, using anonymous account be shame. I’ll try and summarize, but I started a business (in U.S.) in the beginning of 2021 and have yet to file taxes of any kind. Taxes are up to date prior to that when I worked a W-2.
In 2021, which I’m most concerned about, my 50% of the profit was around 40k. I really had no idea how to address taxes going into this as a first time business owner and I didn’t save much. I was married until this year when I went through a divorce so I don’t think I can file as joint anymore. In addition to that, to get things off the ground, I missed some card payments which hurt my credit so I don’t think I have much of an option there as far as putting it all on a credit card. I do think based on my limited knowledge there will be lots of opportunities for write offs, given that I drove all over the place to meet clients, worked out of home office and used personal phone for work. I probably have around 10k in savings that I plan on putting towards this tax fiasco.
Admittedly, I’ve avoided addressing this out of fear for what I might find out but I can’t put it off any longer. So without making me feel like too much of a piece of shit, how do I start digging myself out of this hole? What do people do when they don’t have the money to pay the back taxes they owe? Are payment plans a thing? TIA
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Consult a tax professional to determine the best filing for your situation. This is beyond average Joe’s knowledge.
It’s common to feel anxiety when you’re dealing with tax debt, but don’t bury your head in the sand.
If you owe over $10,000, an experienced CPA or tax attorney could negotiate a plan with the IRS.
Most tax attorneys offer a free consultation, so go ahead and consult with multiple tax attorneys and get the best deal for your situation.
Here are some online resources. Good luck.
https://silvertaxgroup.com/negotiate-irs/
https://www.backtaxeshelp.com/tax-solutions/tax-settlement/tax-negotiation/
Get a CPA and do your taxes. You can literally make money owning a business and it ends up a loss “on paper” where you owe nothing. You might be worrying about nothing. But either way you won’t go to jail over it so just get the paperwork straight and if you owe money you’ll have time to pay and your CPA will guide you
Don’t forget state taxes. The comptroller will seize your accounts and crucify you when they notice.
This isn’t as bad as you think or fear it is. The 40K profit you seem most worried about isn’t that much. The standard deduction in 2021 was $12,550 for a single tax payer, well turns your 40K into $27,450 taxable. Your maximum tax bracket, assuming a single filer, is 12%.
Worse case scenario you owed $3,294 but that might be far higher than what you actually owed depending on your situation. Your fear however has made the bill higher because the IRS will now charge you a failure to file penalty as well as a failure to pay penalty in addition to interest. You are now bleeding and due to your inaction you are continuing to bleed.
STOP THE BLEEDING ASAP. Contact a CPA or tax preparer now, don’t wait another day. The sooner you address this the sooner you stop the bleeding and the more money you will save.
The figures mentioned above ate absolute worse case scenario and you likely owed less.
Get some pro help. CPA or enrolled agent. Shop around a bit. Chose someone you are comfortable with and will walk you through the process. IRS has a few different plans including payment plans (I think up to 72 months). The longer you wait, the worse it gets.
CPA here. Not filing is just sticking your head in the sand. Your tax liability is there even if you don’t known the amount.
But it’s the difference between a monster lurking in the dark and sitting at your kitchen table having a cup of coffee. It’s much scarier in the dark.
So turn the light on by getting with a CPA or EA to get this sorted out and to see how much sticking your head in the sand is gonna cost you.
And forgive yourself. It already happened. Keep your eyes forward
Can an EA file taxes and sign off just like a CPA could?
You find out the facts from a reputable source, that is not read it, a reputable source is a CPA or another type of text preparation person. Tax season will start in late January so from a timing point of view you need to do this today or wait until late April if you try to do it during the tax season the person will be so rushed that it will be difficult
I was in the same boat since 2021 and just got all my crap together the end of this year. I bit the bullet and man was it stressful but I am feeling MUCH better now and found out I only owe 3k at the moment.