How to file back taxes with no records from old self-employment income?

You're in a common situation, and there are definitely ways to handle this without hiring expensive professionals. For filing back taxes with no records, you'll need to create what's called "reasonable estimates" of your income and expenses. This is actually acceptable to the IRS when original records are unavailable. Start by looking at your bank statements from that period if you have them. If not, try requesting them from your bank (though they might only have the last 7 years). For income estimation, think about what you typically charged for jobs, how many jobs you did weekly, and calculate monthly/yearly totals. For expenses, the standard rate for self-employed handymen typically runs 30-45% of gross income for tools, materials, vehicle expenses, etc. File Form 1040 for each year with Schedule C for your self-employment income. Be consistent in your methodology across all years. Document exactly how you arrived at your figures and keep this documentation. The IRS is mainly looking for you to make a good faith effort. Once you file these returns, you'll be in a much better position to negotiate a settlement through an Offer in Compromise or payment plan.

After dealing with a similar nightmare trying to reconstruct old tax returns, I found a lifesaver tool at https://taxr.ai that specifically helps with reconstructing past income and expenses. I was missing records from 8 years of contract work, and their system helped me create defensible estimates based on industry standards and partial information. What worked for me was uploading the partial transcripts I had from the IRS, answering questions about my business type and work patterns, and their AI helped reconstruct reasonable income and expense patterns that I could use on my returns. It saved me countless hours of guesswork and made me feel way more confident signing those returns. The documentation they provided helped explain my estimation methodology to the IRS, which was crucial when I finally got to the settlement phase.

Just wanted to follow up - I tried taxr.ai for my missing returns from 4 years ago and it was seriously helpful! I was skeptical at first but uploaded the partial bank statements I had and answered their questions about my business operations. The system generated detailed income and expense estimates that actually matched the fragments of information I still had. The best part was the documentation package that explained exactly how each number was calculated. I filed my returns last month using these estimates, and just heard back from the IRS that they've been accepted! Now I can finally move forward with setting up a payment plan instead of having this hanging over my head. If you're missing records, this is definitely worth checking out.

When I was in a similar situation with unfiled returns, the most frustrating part was trying to reach someone at the IRS who could actually help me understand the process. I spent WEEKS trying to get through their phone system with no luck. I eventually found https://claimyr.com and their service connected me directly to an IRS agent after just 20 minutes instead of the hours I was wasting on hold. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I talked to explained that I could file Form 56 to document my estimation methodology and gave me specific guidance on how to structure my returned based on my situation. This personal advice was way more valuable than generic online advice because it was specific to my case.

I need to eat my words and follow up on this. After my skeptical comment, I was desperate enough to try Claimyr because I couldn't get through to the IRS about my unfiled taxes. I was actually connected to an IRS representative in about 15 minutes! The agent explained that I could file Form 8275 (Disclosure Statement) along with my returns to explain why I was using estimated figures and how I calculated them. This specific form apparently helps show good faith and reduces penalty risk when you're working with limited documentation. None of the generic advice online mentioned this form, and it's apparently exactly what I needed for my situation. Worth every penny to get actual answers from a real IRS person instead of stressing over conflicting internet advice.

One thing that helped me with a similar situation was getting old bank statements. Even though you mentioned the IRS only had recent transcripts, your bank might have records going back further. Most major banks keep statements for 7+ years, and some even longer. Even partial statements can help establish income patterns. Also, if you filed any returns during those years (like state returns), those can provide clues about your income. Same with mortgage applications or loan documents from that period - they usually include income verification. For the oldest years where you truly have no documentation, be reasonable but conservative in your estimates. The IRS mainly wants to see that you're making an effort to comply.

Don't forget to check with the Social Security Administration too! They might have some records of any income that was reported under your SSN during those years, even if the IRS doesn't have the full returns anymore. This can give you another data point for your estimates. You can request your Social Security Statement online through their website pretty easily and it shows annual reported earnings.