Remember the whole mess with Timothy Geithner's tax debt earlier this year? He blamed it on TurboTax, saying his failure to pay a few years was not flagged by the software. Somehow, he got away with just paying a few fines.
Excuse Trend: According to the news source Bloomberg, A federal court rejected an attempt by two Ohio residents to use the so-called TurboTax defense that Timothy Geithner relied on to help win Senate confirmation as U.S. Treasury Secretary. I'm a little worries this is going to start a trend of blaming TurboTax for any tax issues.
No Excuse If you fail to pay any tax years, there's rarely an excuse. The IRS doesn't want to hear that it's TurboTax's fault, so don't get any funny ideas. Instead, work towards a resolution. Here's what to do:
Steps for Filing Back Taxes
1. File all missing returns. If you don't have your W-2's or other pay information for any of the years, the IRS can provide you with a wage and income transcript. Getting your deductions and credits applied is trickier. If you don't have the records to support a deduction or credit then you can't get anything for it. The good news is you don't have to file anything older than 7 years.
2. Make sure you don't have an existing IRS debt. This debt may or may not be reduced if you file the missing years. More importantly though you can't work with the IRS to settle your debt until you've filed your missing tax years, which is referred to as getting into compliance. So if you have a wage garnishment you can't do anything about getting it lifted until you file your past due returns.
3. If you do have a debt... check to see if it's because of a Substitute Filing Return. If you have a SFR you will need to file an amended return. Your amended return has to prove that the IRS filed your taxes incorrectly. If you don't have any supporting documents for your claim, then the IRS filing stands.
4. If you're expecting a refund from your un-filed taxes you're in for a rude awakening. Granted, re-filing and amended filing can get your total debt reduced. However you can only get actual tax refunds from un-filed returns for the last 2 years. You don't get any money refunded for older returns.
Can you breath now?....Filing your back taxes can seem stressful and difficult and you are pretty likely to owe some money to the IRS. However you're no longer afraid of some IRS-Hitman kicking in your door late some night. OK, we never did that. Or did we?