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
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.