Thank you for this advice. I've been hesitant to "break up" with my CPA because we have history, but you're right that I should at least talk to other professionals. Do you have any suggestions for the best time to interview new CPAs? I'm guessing they're all super busy during actual tax season.

November to early December is the ideal time to interview new CPAs. Most have wrapped up extension filings from the previous season but haven't yet been swamped with year-end planning and new tax season work. They'll have more time to thoroughly review your situation and answer questions. October can also work, but by January they're starting to get busy, and by February they're usually not taking new clients until after April 15th. If you wait until actual tax season, you'll likely end up with whoever has availability, not necessarily the best fit for your needs.

This is really important! My wife and I had a similar situation, but our CPA had us increase our W-2 withholding instead of making quarterly payments. It accomplished the same thing (meeting our tax obligations) but with less paperwork. Worth asking if that's what your CPA was thinking.

Did you do the anonymous inquiry first or did you just identify yourself from the beginning? I'm worried about revealing my info if they might reject me.

I went straight to identifying myself, which was probably my biggest mistake. If I could do it over, I would have either used a representative for an anonymous inquiry or at least called anonymously to discuss my situation before revealing my identity. The state was reasonable in my case, but I've heard stories where the disclosure was rejected and then the taxpayer was fully exposed. So approaching it anonymously first is definitely the safer route if you have any concerns about eligibility.

Sorry for not mentioning it! I'm dealing with Illinois. Anyone have experience with their program specifically?

Illinois has a pretty straightforward VDA program compared to some states. I went through it about 2 years ago. They required 4 years of back filings, and they were pretty reasonable about accepting my calculations as long as I showed my methodology. The key with Illinois is to be extremely clear about why you failed to file previously - they want to see that it wasn't intentional tax avoidance. They also responded much more quickly than I expected - the whole process took about 10 weeks from submission to acceptance.

How long did it take to get your refund after mailing in the paper returns? And did you mail them all together or separately?

It took about 12 weeks to get my refund after mailing in the paper returns. That's much longer than the typical 21 days for e-filing, but expected for paper returns. The IRS is still working through backlogs. I mailed each tax year in separate envelopes to different processing centers. The IRS has different mailing addresses depending on your state and the tax year, so definitely check the IRS website for the correct address for each return. Don't bundle them together - each year needs to go to the specific processing center for that tax year.

What software did you use for your back filing? I'm trying to figure out the most affordable option since I have to do multiple years.

Thanks for this perspective! One question though - does the storage area need to be COMPLETELY exclusive to inventory? Like, I keep most of my supplies in plastic bins that are stacked against one wall of the spare bedroom. The room is maybe 200 sq ft total, but the storage probably only takes up about 40 sq ft. Can I deduct just that portion?

The general rule is that the space needs to be used exclusively for business, but there's a special exception for inventory storage. If you're selling products as your business (which you are), and your home is the only fixed location of that business, you can deduct the space used for inventory storage even if it's part of a room. In your specific case, you could potentially deduct the 40 sq ft used for storage, not the entire 200 sq ft room. You'd calculate what percentage that 40 sq ft is of your entire home's square footage. So if your home is 2,000 sq ft total, you'd be deducting 2% (40 ÷ 2,000) of your eligible home expenses.

Can you do both in the same year though? Like use regular home office deduction for the storage space, but also use Augusta Rule to rent your living room to your business for a few days for meetings?

Thank you so much for this suggestion! I didn't know the SSA would have that information. Do they show the tax withholding amounts too or just the total income? And how quickly does that information get updated?

The SSA only shows your total earnings, not the withholding amounts. So it will help confirm your income, but you'll still need to estimate your federal and state tax withholding from the pay stubs you have. It typically gets updated a few months after the end of each quarter, so there might be some lag. But it's a good way to verify your total earnings when you don't have complete records. Even partial confirmation is better than nothing when you're filing a substitute W-2 form.

This is definitely an option, but there can be a significant delay. W-2s aren't required to be filed with the IRS until January 31st, and then it takes time for them to be processed and appear in your transcript. If the company closed and never filed them at all (which sounds possible in OP's case), they won't show up at all.