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3 One thing nobody's mentioned yet is that you should look into the IRS Fresh Start program. I went through a similar situation with 3 years of unfiled returns, and there are provisions that might help reduce your penalties. The key is to file all missing returns ASAP. Once everything is filed, if you can't pay the full amount, you can apply for an installment agreement. If your total tax debt is under $50,000, it's usually pretty straightforward. For me, the penalties and interest almost doubled my original tax bill, but I qualified for First Time Penalty Abatement which saved me thousands. Don't wait any longer - the penalties just keep growing!
12 How do you qualify for this First Time Penalty Abatement thing? Is it automatic or do you have to specifically request it?
3 You need to specifically request First Time Penalty Abatement - it's not automatic. The basic qualifications are: you haven't had any significant penalties in the 3 years before the tax year you're requesting abatement for, you've filed all currently required returns (or filed extensions), and you've paid or arranged to pay any tax due. You can request it by calling the IRS after filing all your returns, or your tax professional can help you submit the request. In my case, they removed about $4,300 in failure-to-file and failure-to-pay penalties, though I still had to pay the interest. Definitely worth asking for!
22 Has anyone done this themselves without a professional? I'm in a similar situation (unfiled 2016-2018) but really can't afford to pay someone hundreds per return right now.
9 I filed 3 years of back taxes myself last year. It's definitely doable if you're organized and your situation isn't super complicated. The hardest part was getting all the right documents together. For the actual filing, I used FreeTaxUSA's prior year returns - they're only $15 per state return (federal is free) even for old years, much cheaper than TurboTax. Just make sure you're using the forms for the correct tax years and be meticulous about documentation, especially for self-employment income. Allow yourself plenty of time - each return took me about 3-4 hours.
One thing nobody's mentioned - CHECK THE CHECK CAREFULLY! Make sure it's actually from the US Treasury and not some kind of scam. There are so many tax scams these days. Also, when you deposit it, maybe ask your bank to put a longer hold on it just to be extra sure it clears properly. I've heard horror stories of people cashing what they thought were legitimate refund checks, spending the money, and then finding out they were fraudulent.
Totally valid point! Real IRS checks have watermarks and security features. The paper should have a slight blue tint and there's usually a watermark visible when held up to light. Also, if you're not expecting a check or the amount seems off, it's another red flag. Scammers count on people being excited about surprise money and not questioning it too carefully.
The IRS is running behind on notices this year. My tax guy said they're about 3-4 weeks behind on sending out explanations for adjustments. Your extra money could be from: 1. Interest accrued during processing time (they pay interest on delayed refunds) 2. An adjustment from a previous year they found while processing your amended return 3. A math error correction in your favor 4. Some weird glitch in their system I'd cash the check but set aside the "extra" amount for a few months just in case they come asking for it back. The IRS always eventually figures out their mistakes, so better safe than sorry!
One thing nobody mentioned yet - if you were married for part of the year, you might also qualify for married filing jointly IF your ex is willing to file together. This sometimes results in a better tax situation for both people, even after divorce. But obviously this depends on if you're on good terms and both agree it makes financial sense.
Thanks for mentioning this! My ex and I are actually on decent terms. Would we both have to file jointly together or could I still do head of household? I've already submitted my return as head of household based on the advice here...would I need to do an amendment if joint was better?
If you file jointly, both of you have to file together on one return. You can't have one person filing jointly and the other filing head of household - it's an all or nothing choice. Since you've already filed as head of household, you could amend if filing jointly would benefit both of you. However, you'd need to run the numbers both ways to see which is better, and your ex would need to agree. Remember that filing jointly also means you're both responsible for the entire tax liability, so there's some risk involved if you don't completely trust each other.
Does anyone know if FreeTaxUSA handles this situation well? I'm going through a divorce right now (not final yet) and was gonna use FreeTaxUSA but now I'm worried it might get confusing with the filing status questions.
FreeTaxUSA actually handles this pretty well! I used it last year after my divorce. They ask straightforward questions about your marital status as of Dec 31, whether you have dependents, etc. and guide you to the right filing status. Their help sections explain the requirements clearly too.
I would recommend you double check with a professional if your situation is complicated. My sister used FreeTaxUSA after her divorce and it seemed fine but she missed some deductions related to the kids that her accountant caught the following year.
Don't forget about state taxes too! Depending on where you live, you might need to pay state income tax on your photo sales. Some states also have business license requirements even for small operations.
Omg I totally didn't even think about state taxes! I'm in California - do you know if they have any special requirements for small online businesses?
California definitely has state income tax, and they're pretty thorough about collecting it! You'll need to report your income on your CA state tax return. California also technically requires a business license for most businesses, though many small online sellers operate without one initially. If your sales exceed $600 annually, you should register for a Seller's Permit with the California Department of Tax and Fee Administration, especially if you're selling any physical products alongside your digital content. For purely digital goods like photos, the rules can be a bit different, but it's still income that needs to be reported.
Can I just say that the term "side hustle" needs to die? The corporations have tricked us into thinking we need multiple jobs to survive and then glamorized it with cute names. In the 70s one job could support a family but now we're all out here selling feet pics just to make rent 😒
Libby Hassan
After using both systems, I will say the one advantage TurboTax has is the W-2 and 1099 import feature. I have like 8 different 1099-B forms from my brokerage and manually entering all those transactions in FreeTaxUSA was a giant pain. TurboTax just pulled them all in automatically. But if you don't have a ton of forms or complicated investments, FreeTaxUSA is definitely the better value. Just my 2 cents.
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Hunter Hampton
•Do you know if Cash App Tax has import features? I've heard mixed things but thinking about trying it this year.
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Libby Hassan
•Cash App Tax does have some import capabilities, but not as extensive as TurboTax. Last I checked, they could import W-2s by taking a picture, and they can import some 1099s from major brokerages like Robinhood and a few others. The coverage isn't nearly as comprehensive as TurboTax though, which can connect to hundreds of financial institutions. If you have accounts at smaller or less common brokerages, you might still need to enter things manually with Cash App Tax.
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Sofia Peña
I used H&R Block for years until I realized I was paying $120+ for them to enter numbers from my W-2 into a computer... something I could literally do myself in 20 minutes lol. Switched to FreeTaxUSA and saved so much!!
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Aaron Boston
•The free versions often miss deductions though. My cousin works for H&R Block and says they train them to upsell because the free version is designed to be incomplete.
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