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Don't forget about stimulus checks or tax credits! Even if you don't "need" to file, you might be leaving money on the table if you don't. Anyone know if there are any credits available for people with zero income for 2024?
Great point about credits. For 2024, there aren't stimulus payments like during COVID, but depending on your situation, you might qualify for credits like the Recovery Rebate Credit (if you missed previous stimulus payments) or certain educational credits if you were taking classes. Even with zero income, you might qualify for the Earned Income Tax Credit if you had any income at all in the previous 3 years and meet certain other requirements. This is called the "lookback rule" and it's often overlooked.
Friendly reminder that not filing when you don't have to is completely legal, but if you ever need proof of income (or lack thereof) for things like apartment applications, student loan deferments, or government assistance programs, having a filed tax return that shows your income situation is super helpful. I learned this the hard way when I didn't file during a year I didn't work and then couldn't prove my income status for a housing application.
That's actually really helpful - I am planning to apply for some assistance programs and didn't think about needing proof of my (lack of) income. Definitely another good reason to file. Thanks for sharing your experience!
Don't forget to check if you're eligible for the Earned Income Tax Credit! Even as a dependent, if you had earned income, you might qualify. For 2024 taxes (filing in 2025), if you earned less than $17,640 and are at least 25 years old OR have a qualifying child, you could get a pretty decent refund even if you had no tax liability.
Thanks for mentioning this! I'm only 20 though, so I guess I wouldn't qualify until I turn 25? That's kind of a bummer.
You're right about the age limitation, unfortunately. The EITC typically requires you to be at least 25 unless you have a qualifying child. However, you should still look into filing returns for any years where you had federal income tax withheld from your paychecks, as you'd likely get that money refunded regardless of the EITC. And keep the EITC in mind once you hit 25 - it can be quite valuable!
just fyi, you can also get your wage and income transcripts directly from the IRS website by creating an account at irs.gov/transcripts. it's free and shows all reported income documents (W-2s, 1099s, etc) for previous years. might be easier than tracking down old employers
Just tried this and got stuck in ID verification hell. Apparently you need a credit card, mortgage, or auto loan to verify online? Guess I'm stuck calling them after all :/
One thing nobody's mentioned yet - don't ignore the letter or miss the deadline to respond! Even if you haven't hired help yet, send something in writing acknowledging receipt of their notice and stating that you're in the process of gathering records and seeking professional assistance. I made the costly mistake of missing the 30-day window to contest an IRS assessment, and it severely limited my options after that. At minimum, request an extension while you find representation. You can always do this yourself even before hiring someone.
Thank you for mentioning this! The letter gives me 45 days to respond or file an appeal. Should I just send a simple letter saying I'm gathering documentation and seeking professional help? Or is there specific language I should use?
Yes, send a simple letter acknowledging receipt of their notice (include the notice number) and state that you're gathering documentation and seeking professional representation. Request an extension of time to respond fully - typically 30 or 60 additional days. Keep it professional and straightforward - don't try to argue your case yet or make any specific claims about your tax situation until you have professional guidance. The goal is simply to prevent default assessment while you get your team together. Send it certified mail so you have proof of delivery.
Been through this. For $140k, definitely get a tax attorney first, then let them decide if you need a CPA too. Don't cheap out here - a good tax attorney literally saved me about $70k on a $120k assessment. Make sure whoever you hire specializes in tax controversy/IRS disputes specifically. Regular CPAs who just do tax prep often make things worse in audit situations. Look for someone with at least 10+ years experience dealing with the IRS.
As a practical matter, here's the breakdown of what you actually need: For a complex case like yours with $850k revenue, multiple unfiled years, and state levies already happening, you ideally want BOTH a CPA and a tax attorney, but in a way that minimizes cost. Here's what I'd recommend: 1. Have a CPA prepare all your actual returns with proper expenses (much cheaper than an attorney doing this) 2. Have a consultation with a tax attorney (1-2 hours) to assess if there's risk of criminal charges 3. If no criminal risk, let the CPA handle the IRS negotiations 4. If there is risk, then yes, retain the attorney I've gone through this with my business. Initially used just a CPA, but when the IRS started making noises about willful neglect, I brought in an attorney. The attorney only handled the specific negotiations and communications, while the CPA did all the preparation work. This hybrid approach kept my costs reasonable while still getting proper protection.
Would the original poster need to file business returns separately from personal returns? And what about sales tax - is that a completely different process? I'm confused about how all these different tax types get resolved.
Based on the description, it sounds like the business was likely a sole proprietorship or single-member LLC, which means business income would be reported on Schedule C of the personal return. So the CPA would prepare personal returns (Form 1040) with business schedules attached for each year. Sales tax is indeed a separate process handled at the state level. The CPA would need to prepare and file sales tax returns for all unfiled periods. This is separate from income tax filings but should be addressed simultaneously since the state has already started collection actions. Most tax resolution CPAs can handle both income and sales tax matters, but it's worth confirming this specifically when hiring someone.
Don't overlook the penalties here - they're gonna be massive after 5 years of non-filing. Make sure whoever you hire talks about penalty abatement. The IRS has "first-time penalty abatement" and "reasonable cause" options that could save you tens of thousands. I had 2 years unfiled and the penalties were almost 40% of what I owed! My CPA got most of them removed by showing I had health issues that prevented timely filing.
Good point about penalties. I think with the substitute return already filed, doesn't that mean some penalties are already assessed? Is it harder to get abatement after that point?
NebulaNova
Has anyone had success calling the Healthcare Marketplace directly instead of the IRS? My return got rejected for a similar reason, and it turned out the Marketplace had updated my 1095-A but hadn't sent me the revised version. They emailed me an updated form within 24hrs of calling them.
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Mateo Hernandez
ā¢This worked for me too! The Marketplace phone reps were way easier to reach than the IRS. Found out they had recalculated my premium tax credit but the updated 1095-A wasn't automatically sent to me. Got the new form and resubmitted without issues.
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Aisha Khan
Pro tip: In TurboTax, go to Tax Documents section, delete ALL versions of your 1095 forms, then re-upload them, but make sure to manually enter all the information when prompted rather than letting TurboTax try to "read" the forms. Sometimes their OCR misreads critical info. And double-check the "coverage months" boxes - I've seen cases where TurboTax marks someone as having coverage for incorrect months, which creates a mismatch with what the Marketplace reported to the IRS. Good luck! These 1095 rejections are frustrating but usually fixable with some patience.
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