Is there a statute of limitations on how far back they can come after you for unfiled taxes? I'm worried they'll want returns from like 10 years ago even though I wasn't making much money back then.

The statute of limitations for the IRS to assess taxes is generally 3 years from the date you file your return. However - and this is important - there is NO statute of limitations on unfiled returns. The clock doesn't start until you actually file. For your situation, they typically focus on the last 6 years for unfiled returns, but technically they could go back further. That said, if you weren't making much money in those earlier years, it might not be worth their effort. My tax preparer advised me to focus on the last 6 years, but your situation might be different.

This is so important. My brother dealt with the IRS fine on his back taxes but completely forgot about state taxes. California actually put a lien on his property before he even knew what was happening.

Is there a deadline for the IRS to process prior year returns and issue refunds? I filed my 2021 return about 2 months ago and haven't heard anything.

The IRS doesn't have a specific deadline for processing prior year returns, but they typically take longer than current year returns. Prior year returns are usually processed manually rather than through their automated systems, which adds to the processing time. Generally, you can expect a processing time of 6-12 weeks for paper returns, but for prior year returns, it can sometimes take 16 weeks or more. If it's been more than 16 weeks since you submitted your return, you can call the IRS or use their "Where's My Refund" tool, though that tool sometimes doesn't work well for prior year returns.

Actually I think there was a separate phaseout for the additional amount over $2,000. The original $2,000 CTC didn't start phasing out until $200k single/$400k married.

You're absolutely right, thanks for that correction! The 2021 Child Tax Credit had two different phase-out thresholds: The enhanced portion (the extra $1,600 for kids under 6 or $1,000 for kids 6-17) started phasing out at $75,000 for single filers and $150,000 for married filing jointly. The base $2,000 credit didn't start phasing out until $200,000 for single filers and $400,000 for married filing jointly. This was one of the more confusing aspects of the 2021 tax changes. Thanks for pointing that out!

Is it too late to create a mileage log now? I kept rough track in my calendar of my routes and deliveries but didn't have a formal "mileage log" per se. Can I recreate one from my notes?

You can reconstruct a reasonable mileage log from your existing notes and calendars. The IRS doesn't require a specific format - they just need to see evidence that you tracked business vs personal miles. Include dates, starting location, destination, purpose of trip, and mileage for each business drive. Be honest about reconstructing it from your notes - don't claim it's an original contemporaneous log if it isn't. Many small business owners have to reconstruct logs during audits, and the IRS understands this as long as you have some supporting documentation like your delivery schedules, client meetings, etc.

For high-mileage, lower-cost vehicles, standard mileage rate usually wins. I've done both delivery and rideshare for years. When I tracked both methods side by side last year, standard mileage gave me a $9,850 deduction while actual expenses would have been around $7,200. But it totally depends on your vehicle and situation.

That's not correct. You can't claim Head of Household if you're married (unless you're legally separated or meet very specific requirements). If he's married and living with his wife, Married Filing Jointly is the correct status, not Head of Household.

Oh shoot, you're right - I was mixing up the requirements. For some reason I was thinking Head of Household was for anyone supporting dependents, but you're correct that married couples living together can't use it. Thanks for the correction! Married Filing Jointly would indeed be the right status in this case.

Actually, your spouse doesn't need earned income for you to contribute to a spousal IRA as long as you file jointly and have sufficient earned income yourself. It's one of the few exceptions to the "earned income" requirement for IRA contributions.

I've heard about CNC status but wasn't sure if it would apply in this case. Would the IRS consider CNC even if my client has consistent income? Their issue is more that the total amount is overwhelming rather than having no income at all.

CNC status is based on ability to pay after necessary living expenses, not just on having income. If your client's income is being consumed by reasonable living expenses with nothing left over, they could still qualify. The IRS uses their Collection Financial Standards to determine what counts as necessary expenses. Have your client document all their actual expenses - housing, utilities, food, healthcare, transportation, etc. If these legitimate expenses leave little to nothing for tax payments, they have a case for CNC status even with steady income. The IRS would rather put someone in CNC temporarily than force them into a payment plan they can't maintain.

Be careful with this advice! The 10-year clock doesn't start until the tax is assessed, which can't happen until the return is filed. For unfiled returns, the clock hasn't even started ticking yet. Plus, certain actions can extend that 10-year period, like requesting an installment agreement or filing bankruptcy.