Haven't filed taxes for past years as independent contractor - panicking about consequences

Take a deep breath first! This situation is way more common than you think, and while it's definitely serious, it's absolutely fixable. I've seen much worse cases resolved successfully. Start by gathering whatever income documentation you can - bank statements showing deposits, payment apps (Venmo, PayPal, etc.), emails confirming deals, or anything that shows your income. For expenses, credit card statements, bank withdrawals, email receipts, and even calendar appointments can help reconstruct your business activities. You absolutely can still claim deductions even without your original P&Ls. You'll need to recreate your records as best you can. Standard deductions for real estate contractors often include home office, mileage, phone/internet, marketing costs, and professional fees. Penalties increase over time, so filing ASAP will minimize them. You'll face failure-to-file penalties (5% per month, max 25%) and failure-to-pay penalties (0.5% per month). Interest also accrues, but current rates aren't outrageous. Consider getting professional help - a tax resolution specialist or CPA experienced with back taxes can often save you more than they cost. They can help with payment plans, possible penalty abatement, and ensuring you claim every legitimate deduction.

After staring down a similar nightmare situation last year, I finally tried https://taxr.ai when nothing else was working for me. It was a game-changer for reconstructing missing financial records. I had lost access to my business documentation (different situation - hard drive failure) for two years of self-employment income. Their system analyzed my bank statements and automatically categorized transactions to rebuild my business expenses. It found deductions I would have completely missed trying to do this manually. The transcript analyzer feature was especially helpful for figuring out what the IRS already knew about my income, which helped me avoid accidentally contradicting information they had. They also have templates specifically for independent contractors in real estate that made recreating P&Ls much easier than starting from scratch. Saved me hours of stressful guesswork.

Just wanted to follow up - I tried https://taxr.ai after seeing it mentioned here and it was exactly what I needed. Uploaded my bank statements from 2023 and it found over $13k in deductible expenses I had forgotten about! The mileage tracker reconstructed my driving patterns from calendar entries which was insane. My situation wasn't as serious (only one year unfiled) but I was able to generate a complete P&L and expense report that my accountant accepted without issues. The best part was getting everything organized in a way that made sense rather than just having a shoebox of receipts. Actually ended up owing way less than I feared.

After trying for TWO MONTHS to get through to someone at the IRS about my unfiled returns, I finally used https://claimyr.com and got connected to an actual IRS agent in under 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was in a similar situation (unfiled 2020-2021 with lost records) and needed to know exactly what information the IRS already had on file about my income before trying to recreate everything. The IRS agent was able to send me transcripts of all reported 1099 income which gave me a starting point. They also confirmed which payment plans I'd qualify for based on my situation. Saved me countless hours of redial hell and uncertainty. Just knowing exactly where I stood with the IRS reduced my anxiety significantly.

I need to eat my words. I was the skeptic who thought the Claimyr service sounded like BS, but I was desperate enough to try it. Got connected to an IRS agent in about 35 minutes yesterday after spending WEEKS trying on my own. The agent accessed my file and confirmed I qualified for a first-time penalty abatement, which will save me around $2,200 in penalties on my unfiled years. They also set up a payment plan that actually works with my budget instead of the automated online system that wanted way more per month. Most importantly, I found out I wasn't flagged for any collection action yet, so I caught this just in time. If you're in a similar situation, don't wait - finding out exactly where you stand is the first step to fixing it.

Something nobody's mentioned yet - ESTIMATED TAXES. Once you get caught up with past filings, don't forget you probably need to make quarterly estimated tax payments for 2024 to avoid being in this same situation next year. The next quarterly deadline is coming up. As someone who's been self-employed for 10+ years, this is the cycle that trips up so many independent contractors. You finally get caught up on past taxes, but then forget you need to be making regular payments on current income. Calendar these payment dates NOW: April 15, June 17, September 16, January 15 (2025).

Does anyone know if the IRS is still doing that first-time penalty abatement I've heard about? I'm in almost the identical situation (unfiled 2022-2023, self-employed) and wondering if that could help me?

Victoria, I completely understand that crushing anxiety - I was in your exact shoes 18 months ago with unfiled returns from my freelance graphic design work. The panic attacks were real, but I promise you this is absolutely manageable. Here's your immediate action plan: **STEP 1:** Contact your bank ASAP and request detailed statements for 2022-2023. Most banks can provide up to 7 years of records. Also check any business banking apps, PayPal, Venmo, or Zelle for transaction histories. **STEP 2:** Reach out to clients you worked with during those years. Many will still have records of payments made to you, and some might even have copies of invoices you sent them. **STEP 3:** Check your email for ANY business-related correspondence - contract confirmations, payment notifications, expense receipts, travel bookings, etc. This can help reconstruct your business activities. **STEP 4:** File those returns IMMEDIATELY, even if incomplete. The failure-to-file penalty is much worse than failure-to-pay, and it stops accruing once you file. For penalties: You're likely looking at 5% per month (max 25%) for failure-to-file, plus 0.5% per month for failure-to-pay, plus interest. But if you qualify for first-time penalty abatement, you can get one year's penalties completely waived. The IRS has payment plan options if you can't pay everything at once. Don't let fear paralyze you - every day you wait, the penalties grow. You've got this!