Didn't file taxes for 3 years (2021-2023), need advice on handling back taxes and payment plans

You're doing the right thing by addressing this now rather than letting it continue. The IRS generally has more options for people who voluntarily come forward than those who wait until they're caught. First, you'll need to file all your missing returns ASAP. The IRS has a statute of limitations of 10 years for collecting tax debt, but that clock doesn't start until you file. For unfiled returns, there's no time limit. For penalty relief, the IRS offers a First-Time Penalty Abatement if you haven't had any significant penalties in the past three years and have filed all required returns (or filed extensions). This won't apply until you've filed the missing returns, but keep it in mind. Yes, installment plans are definitely available! For debts under $50,000, you can usually set up a payment plan online. The standard term is 72 months. Interest will continue to accrue, but it stops most penalties from continuing. Being a W-2 employee in Texas (no state income tax) makes your situation somewhat simpler than if you had business income or lived in a state with income tax.

I went through almost the exact same situation last year. I had unfiled returns for 3 years and was terrified of dealing with it. I finally used taxr.ai (https://taxr.ai) to help me sort through all my old documents and figure out what I needed to do. The tool analyzed my situation and helped me understand exactly what forms I needed to file for each year. It also gave me a realistic estimate of what I would owe including penalties. I was able to get all my returns done in a weekend instead of spending weeks stressed about it. They have this feature that helped me organize all my old W-2s and other tax documents that I had scattered everywhere. It made preparing those back tax returns way less intimidating.

Wanted to follow up here - I actually tried taxr.ai after seeing this comment. It was really helpful for my situation! I had tax documents spread across 3 different email accounts and some paper forms in a folder somewhere. The tool helped me organize everything and figure out what I was missing. Got all my back tax returns done last weekend and submitted them to the IRS. They estimated I'll owe about $12k including penalties, which sucks but at least now I have a plan. The peace of mind from just having everything filed is worth it. Now I'm just waiting for the official IRS notice so I can set up a payment plan.

After getting my back taxes filed, the absolute worst part was trying to call the IRS to set up my payment plan. I spent HOURS on hold multiple times and kept getting disconnected. So frustrating. I finally found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 15 minutes. They have this demo video showing how it works: https://youtu.be/_kiP6q8DX5c Once I got through, the agent was actually pretty helpful. They got me set up on an installment plan right away and even told me how to apply for penalty abatement after I make a few payments. Definitely worth it after wasting days trying to get through on my own.

I have to admit I was completely wrong about Claimyr. After posting that skeptical comment, I decided to try it myself since I've been trying to reach the IRS for weeks about my payment plan. It actually worked exactly as described. I got a call back in about 20 minutes, and sure enough, there was an IRS agent on the line. Got my payment plan set up in one call instead of the endless hold-disconnect cycle I'd been dealing with. The agent even helped me understand how to apply for penalty abatement once I've made a few payments. Said because I had a clean record before this, I might qualify for First Time Penalty Abatement which could save me almost $2,000.

One thing nobody's mentioned yet - get those returns filed ASAP because if the IRS files a Substitute for Return (SFR) for you, they'll only use standard deductions and won't include any credits you might be eligible for. They basically give you the worst possible tax situation. I learned this the hard way when they did an SFR for my 2019 taxes. They said I owed $11,400 when I actually only owed about $4,200 when I finally filed properly with all my legitimate deductions and credits.

Has anyone used one of those tax relief companies that advertise on the radio? They claim they can settle with the IRS for "pennies on the dollar"... wondering if that's legitimate for situations like this.