


Ask the community...
I'm literally going through this exact situation right now. Hadn't filed since 2020 and just got everything submitted last month. Here's what happened: - No jail time (they save that for actual tax fraud not just being behind) - Had to pay about $1,200 in penalties and interest - But I also got back $3,400 in refunds from two of the years - Net positive of $2,200! Just GET IT DONE. The anxiety of not knowing is wayyy worse than the actual consequences. I used a CPA and it cost about $350 per year but worth every penny for the peace of mind.
Wait you can actually get refunds from previous years still? I thought there was a time limit?
Make sure you file all the missing years at the same time if possible. I made the mistake of filing one year at a time and the IRS systems got confused - they put a hold on my most recent return because they were still processing my prior years, which delayed everything by months. Also if you do end up owing, ask about a First Time Penalty Abatement. If you've had a clean record before this, they might waive some penalties (but not the interest).
Everyone's talking about whether the IRS will notice, but nobody's mentioned the statute of limitations. The IRS generally has 3 years from the filing date to audit your return (with some exceptions like fraud). So technically, they could "reject" (audit) your return years later. But for a minor discrepancy like yours, they'd typically just send a CP2000 notice (automated underreporter notice) if they catch the mismatch between your reported student loan interest and what the lender reported. You'd owe the tax difference plus maybe some interest, but probably no penalties for something that small and unintentional.
Thanks for mentioning the 3 year thing - that's actually making me more anxious lol. But good to know about the CP2000 notice. Is that something that would affect my credit score or anything?
Life pro tip: Always wait until the last minute to file your taxes so you have all your documents! I never file before April 1st to make sure I have all those corrected forms that companies love to send late. Too late for you this year but remember for next time. Student loan companies and investment firms are notorious for sending corrections.
Great advice except when you're expecting a refund! I filed in early February and got my refund 9 days later. Waiting till April would've meant two more months without that money. There's always a tradeoff.
Don't overthink this - for unfiled taxes, DEFINITELY an EA. CPA is overkill. But make sure your uncle knows he'll likely need to pay not just for the professional help but also potentially significant penalties and interest. The sooner he addresses this, the better.
Thanks for the straight answer. Do you have any idea what range of penalties we might be looking at for the unreported house sale? That's the part that worries me the most.
The penalties will depend on several factors, but generally: - Failure-to-file penalty: about 5% of unpaid taxes per month, up to 25% - Failure-to-pay penalty: about 0.5% per month, up to 25% - Interest on unpaid taxes: varies based on federal rates For the house sale specifically, if it was his primary residence and he lived there at least 2 of the 5 years before selling, he might qualify for an exclusion (up to $250k for single, $500k married) which could mean no tax due on that specifically. The good news is that the IRS does have programs for abating penalties in some cases. A good EA will know exactly which relief programs your uncle might qualify for. Since it wasn't intentional and there was a language barrier, there might be some options.
Hate to be that person, but if he deliberately sold a house and didn't report it, that's not a "language barrier" issue... that's tax evasion. He should talk to a tax attorney, not just an EA or CPA.
That's a bit harsh. Plenty of people don't understand that home sales need to be reported, especially if English isn't their first language. Not everyone who makes a tax mistake is committing deliberate evasion.
Just went thru this last month. My advice: gather ALL your docs before you start the process. I had to restart cuz I was missing some info and it was super frustrating. Also, if you filed jointly, make sure your spouse is available too - they asked questions only he could answer.
Thanks for the heads up! I'll make sure to have everything ready before I start. Did you do it online or by phone?
I did it online. It was actually pretty quick once I had all the right info. Good luck!
PSA: Be careful of scams related to this! I've heard of people getting calls or emails claiming to be the IRS and asking for personal info. ALWAYS go through the official IRS website or call them directly using the number on your notice.
π This! My grandma almost fell for one of these scams. They're getting really sophisticated.
Good lookin out! These scammers are vultures π¦
Edison Estevez
Based on your cousin's situation, I'd definitely go with an Enrolled Agent who specializes in back tax filings and IRS representation. Here's why: 1) The unfiled returns need someone who knows the IRS procedures inside and out 2) The unreported real estate sale has potential capital gains implications 3) Missing W-2s/1099s requires someone familiar with IRS wage and income transcript requests When I was behind on taxes (not 10 years, but 3), I interviewed both a CPA and an EA. The CPA was more expensive and seemed less comfortable with the IRS negotiation part. The EA I ended up hiring had previously worked for the IRS for 15 years and knew exactly how to handle everything. The EA was able to get penalties reduced through a first-time abatement request and set up a reasonable payment plan. Make sure whoever your cousin hires has specific experience with tax resolution and IRS collections, not just routine tax preparation.
0 coins
Emily Nguyen-Smith
β’Did your EA help you get any of the penalties removed? I'm wondering if the 'first time abatement' thing works if you've ignored filing for many years.
0 coins
Edison Estevez
β’Yes, I got the failure-to-file and failure-to-pay penalties removed for the first year through First Time Abatement (FTA). For the other years, my EA negotiated reduced penalties based on reasonable cause (I had medical issues). The First Time Abatement typically only works for one tax year, and you generally need to have a clean compliance record for the 3 years before that. For someone who hasn't filed in 10+ years, they might not qualify for FTA right away, but after they get into compliance, they might qualify for the most recent year. My EA also helped me request Currently Not Collectible status temporarily when I was between jobs, which paused all collection activities. The key was having someone who knew what relief options were available and how to properly request them.
0 coins
James Johnson
Just wanna add something important that nobody's mentioned yet. When your cousin starts filing those old returns, they should NOT use the current year's tax forms! Each year needs to be filed using that specific year's tax forms because tax laws change. I made this mistake when catching up on 3 years of unfiled taxes. I printed the most recent forms thinking they were all the same and had to redo everything. Each tax year has different rules, deductions, credits, and rates. An EA or CPA will know this, but if your cousin tries to DIY any of this, they need to use the correct year's forms which can be found on the IRS website's prior year forms section.
0 coins
Sophia Rodriguez
β’This is super important advice! I work at a tax office (not a professional, just admin) and people come in ALL THE TIME with self-prepared returns using the wrong year's forms. The tax code changes almost every year in some way.
0 coins
Mia Green
β’Do you know if tax software handles this automatically? Like if I buy the 2025 version of TurboTax, can I use it to file my 2022 return that I never did?
0 coins