Can they really go back indefinitely? I heard there was a 3 year limit on audits.

The 3-year limit applies to returns that have been filed. If you file a return but omit more than 25% of your gross income, the statute of limitations extends to 6 years. But if you don't file a return at all, there is NO statute of limitations. The IRS can come after you 10, 15, even 20 years later. And for criminal tax evasion (which hiding $1M could potentially be), the statute of limitations is 6 years. This is why tax professionals always advise filing something, even if you can't pay. Filing starts the clock on the statute of limitations, while not filing keeps your case open indefinitely.

Tax attorney here - generally no. Most tax debts survive bankruptcy. The rules are complicated, but for capital gains tax, you're typically stuck with it even after bankruptcy. Plus, if the IRS determines you deliberately avoided paying taxes, they might pursue criminal charges which definitely aren't dischargeable. To be eligible for discharge of any tax debt in bankruptcy, the taxes must be at least 3 years old, you must have filed a return at least 2 years before bankruptcy, and the IRS must have assessed the tax at least 240 days before you file. Willful evasion or fraud will make the debt non-dischargeable regardless.

Super curious about this too. The IRS letter says I need to respond within 30 days, but I'm worried about what happens if the amendment takes months to process. Do they put collections on hold the whole time?

Amended returns are currently taking 4-6 months to process, sometimes longer depending on complexity. The key is to respond to the notice within the 30-day deadline, explaining that you're filing an amended return to correct the issue. When you respond, include a clear explanation of why you believe the tax assessment is incorrect (gross vs net income) and state that you're preparing an amended return. This formal response will typically pause immediate collection actions. If you can speak with an IRS representative directly, they can often place a more specific hold on your account while the amendment processes.

Yes, typically you'll need to file amended state returns too. Most states automatically get notified of federal adjustments and will adjust your state tax liability accordingly. Better to be proactive and file the state amendment rather than waiting for them to come after you too.

Do you know if there's a deadline for filing the Form 843 for FICA refunds? I just realized my employer was withholding these taxes during my OPT period last year.

Yes, there's definitely a deadline. You need to file Form 843 for FICA tax refunds within 3 years from the date you filed your income tax return for that year, or within 2 years from the date you paid the taxes, whichever is later. Since you're talking about last year's taxes, you have plenty of time, but don't put it off too long. The documentation requirements can be strict, and you want to submit while you still have easy access to all your visa and employment records.

I did mine myself last year and regretted it. Took me forever to figure out how to fill out Form 843 correctly and my claim was rejected twice for small errors. First time was because I didn't include a statement from my employer, second time because I didn't properly document my visa status. The specialized software is worth it IMO.

1 How can I tell which years I might have owed taxes without actually filing? My situation was pretty simple - just W-2 income with standard tax withholding, but I honestly don't remember the details from 5+ years ago.

3 You can request a "Wage and Income Transcript" from the IRS which shows all reported income for a specific year. This will show your W-2s, 1099s, and other income documents that were filed. If you only had W-2 income with standard withholding, you may not owe anything, but you'd need to run the numbers to be sure. Another option is to request an "Account Transcript" which will show if the IRS has already created a substitute return for you and assessed any taxes. This can give you a clearer picture of which years need attention first.

1 That's really helpful, thank you! So it sounds like for FAFSA purposes I'm probably okay since I've filed 2021-2023, but I should still consider filing the older years to avoid any potential issues with the IRS down the road. Do you know if scholarships or grants ever look at tax compliance?

13 Most federal and institutional scholarships and grants follow FAFSA guidelines, so they primarily care about your current financial situation rather than past tax compliance. However, some private scholarships may have their own requirements, and occasionally they do perform background checks that could potentially flag tax issues. The bigger concern is indeed potential issues with the IRS. Even if you don't owe money, having unfiled returns can create problems years later - especially when you reach important financial milestones like buying a home, starting a business, or applying for certain jobs. It's generally best to clean up tax issues while they're relatively recent and documentation is easier to obtain.

Thanks for bringing this up! My qualified expenses should be enough since my tuition and required fees were about $18,000 this year, and I only received a $5,000 scholarship. The bond interest I'm trying to exclude is around $2,400. I wasn't counting room and board - good to know that's excluded for this benefit. Does it matter if some of the qualified expenses were paid from a 529 plan? Or does that create another reduction?

Yes, expenses paid with 529 plan distributions would reduce your qualified education expenses for the savings bond interest exclusion. The IRS doesn't allow "double-dipping" of tax benefits. So if you used $8,000 from a 529 plan to pay for some of that $18,000 in tuition and fees, and received a $5,000 scholarship, your remaining qualified expenses for Form 8815 would be reduced to $5,000 ($18,000 - $5,000 - $8,000). That would limit how much bond interest you could exclude.

There's no time limit between when the bonds were issued and when you use them for education. As long as you cash the bonds and pay the qualified education expenses in the same tax year, you can potentially claim the exclusion (assuming you meet all the other requirements about ownership, income limits, etc.). So 2010 bonds used for 2025 education expenses could qualify. Just remember both actions (redeeming the bonds and paying the expenses) need to happen in the same tax year.