Important thing to know - if you're expecting refunds, you only have 3 years from the original filing deadline to claim them. So for example, 2020 refunds can still be claimed until April 2024, but anything before that is gone forever if you were owed money. BUT if you owe the IRS money, there's no time limit on when they can come after you. So definitely better to address this proactively like you're doing now!

I went through something very similar about 3 years ago - hadn't filed for 6 years due to a combination of job changes, a messy divorce, and just pure avoidance anxiety. The longer I waited, the more terrifying it seemed. Here's what worked for me: Start by getting your Account Transcript from the IRS online (irs.gov). This will show you if they've already filed substitute returns for you (which they sometimes do if you have W-2 income). If they have, you'll see exactly what they think you owe. Don't try to tackle all years at once - it's overwhelming. I started with the most recent year and worked backwards. Focus on getting accurate numbers rather than rushing through everything. One thing that really helped my anxiety was realizing that the IRS actually wants to work with you once you make contact. They have payment plans, penalty abatement options, and they're generally reasonable if you're making a good faith effort to comply. The relief of finally addressing it is incredible. Yes, there will be some penalties and interest, but it's probably not as catastrophic as your anxiety is telling you it will be. You've got this!

22 Has anyone used TurboTax to handle reporting this kind of situation? I'm in a similar situation with medical crowdfunding and wondering if the basic version handles this or if I need to upgrade.

I went through something very similar after my car accident last year. My family set up a GoFundMe that raised about $28,000 for my medical expenses, and I was terrified about the tax implications. After consulting with a tax professional, I learned that medical crowdfunding donations are indeed treated as gifts and aren't taxable income to you as the recipient. The key is that people donated without expecting anything in return - they were helping with your medical crisis out of generosity. A few important points from my experience: - Keep detailed records of the GoFundMe campaign, including the total raised and donor information - Save all your medical bills and receipts showing how the money was used - If you itemize deductions, you can only deduct medical expenses you paid out of your own pocket (not the portion covered by GoFundMe) - The donors are responsible for any gift tax reporting if they gave over the annual exclusion limit I kept a simple spreadsheet tracking donations received vs. medical expenses paid, which gave me peace of mind. You're not required to report the gifts as income, but having good documentation is always smart. Hope this helps ease your worry!

Hey Chloe! I went through something similar a few years ago after a slip and fall accident. You're absolutely right to be cautious about the tax implications - it's smart to get this figured out before you spend any of the money. From my experience and what I learned, personal injury settlements for physical injuries are generally NOT taxable at the federal level. Since you mentioned this was from being hit by a car while walking (clearly a physical injury situation), the portion of your settlement compensating you for medical bills, pain and suffering, and physical injuries should be tax-free. However, keep an eye out for any parts of your settlement that might be taxable: - Any interest earned on the settlement amount - Compensation specifically for lost wages/income - Punitive damages (if any) - If you previously deducted medical expenses related to this accident on past tax returns and are now being reimbursed My advice would be to get a detailed breakdown of your settlement from your attorney showing how the money is allocated across different categories. This will make it much easier to determine what (if anything) needs to be reported as taxable income. Also don't forget about potential health insurance subrogation - if your health insurance paid for any of your medical treatment, they might have a claim against your settlement. It won't affect the tax treatment, but it could reduce what you actually keep. Hope this helps and congrats on getting through what I'm sure was a stressful situation!

I'm really glad you're being proactive about this! As someone who's dealt with settlement taxation issues before, I can confirm that most personal injury settlements are indeed non-taxable at the federal level, especially when they're compensating for physical injuries like yours. Since you were physically hit by a car, the portions of your settlement covering medical expenses, pain and suffering, and compensation for your physical injuries should be tax-free under IRC Section 104(a)(2). However, I'd recommend getting a detailed breakdown from your attorney showing exactly how your settlement is allocated - this will be crucial for tax purposes. A few things to watch out for that WOULD be taxable: - Any interest on the settlement amount - Specific compensation for lost wages or income - Punitive damages (less common in car accident cases but possible) Also, if you deducted any medical expenses from this accident on previous tax returns and your settlement reimburses those same expenses, that portion could be taxable under the "tax benefit rule." Don't forget to check if your health insurance has any subrogation rights - they might claim reimbursement for medical bills they paid related to your accident. If you need specific guidance on your settlement documents, you might want to consult with a tax professional or even contact the IRS directly for clarification on your particular situation. Better to be safe than sorry when it comes to tax compliance!

I've been following this thread closely since I'm dealing with similar S Corp penalty issues ($7k across three years). The variety of approaches and success stories here are really encouraging! One thing I wanted to add based on my research is that the IRS has specific procedures for S Corp penalty abatement that are different from individual tax penalties. There's actually an internal memo (IRM 20.1.5.16) that gives IRS agents guidance on when to approve reasonable cause for business penalties, and it's more flexible than most people realize. Also, for anyone considering the various services mentioned here, I'd recommend starting with the free options first. The Taxpayer Advocate Service really can be helpful for cases involving multiple years and significant financial impact. I submitted a TAS case last month and got assigned an advocate who's been super responsive and knowledgeable about S Corp penalties specifically. The key thing I've learned is that the IRS actually wants to work with taxpayers who are making good faith efforts to resolve these issues. They'd rather get some payment and compliance than deal with prolonged collection efforts. The trick is knowing how to present your case in a way that fits their guidelines. Has anyone here had experience with installment agreements while penalty abatement requests are being processed? That might be another angle to explore for managing the financial pressure while fighting the penalties.

I'm going through the exact same nightmare right now - $8,500 in S Corp penalties across three years and feeling completely overwhelmed. Reading through everyone's experiences here has been incredibly helpful and honestly the first time I've felt like there might be a way out of this mess. I've been putting off dealing with this because the amount felt so insurmountable, but seeing people successfully get 70%+ of their penalties abated is giving me the motivation to actually take action. One question for those who've been successful - when you're putting together your reasonable cause letter, how detailed should you get about your specific circumstances? I had some legitimate business hardships during those years (lost a major client, had to lay off employees) but I'm not sure if providing too much detail makes it sound like I'm making excuses or if the IRS actually wants that level of specificity. Also, for the folks who mentioned the collections cases - should I try to get the penalties that haven't gone to collections yet resolved first, or tackle everything at once? I have two years already with debt collectors and one that just got the final notice. Thanks to everyone sharing their experiences. This thread is literally the most helpful information I've found anywhere online about actually fighting these penalties!

Friendly reminder to everyone dealing w this: don't try calling IRS about it. File the proper forms and wait. Calling just wastes ur time fr

Been through this exact situation myself. The IRS will definitely go after your ex - they don't mess around with fraudulent dependent claims. Beyond the penalties Anna mentioned, your ex might also have to pay interest on any unpaid taxes. The good news is that since you have a court order, you have solid documentation on your side. Just make sure to file your return claiming the child even if it gets rejected electronically - mail it in with copies of the court order attached. The IRS will sort it out and your ex will have to deal with the consequences.