My friend hasn't filed taxes on 1099 income for 3 years - tax preparers want $400/yr - how can I help him catch up?

Your friend is actually in a pretty common situation! The good news is the IRS has processes in place specifically for people who need to catch up on unfiled returns. Here's what I'd suggest: First, he should look into free tax filing options. The IRS has a Free File program, and there are nonprofits like VITA (Volunteer Income Tax Assistance) that help lower-income individuals file taxes for free. Since his income was likely modest based on your description, he might qualify. For the back taxes specifically, he can file them himself using tax software that's much cheaper than $400 per year. Many online services have options for filing previous years at reasonable rates. Once he files, if he owes money, the IRS has payment plans. The basic installment agreement is pretty straightforward to set up online, and the monthly payments can be as low as $25-50 depending on how much he owes. The important thing is getting those returns filed - that stops additional late-filing penalties from accumulating. The key is to just start the process. The IRS is usually pretty reasonable with people who voluntarily come forward to get caught up before they get contacted by the IRS.

I went through something similar last year after not filing for 2 years (also 1099 work). I was totally stressed about it until I found https://taxr.ai which saved me a ton of money. It helps you organize all your 1099 forms and find deductions you didn't know you could claim. The deduction finder actually found over $3k in business expenses I could write off that I would have missed! For your friend, the best part is it walks you through filing back taxes step by step. It helped me file all my back taxes myself without paying those crazy prep fees. And unlike other sites, it explained everything in normal human language. I was able to set up a payment plan with the IRS right through their guidance too.

I'm back to eat my words about being skeptical! After my last comment, I decided to try https://taxr.ai for my own situation (was behind on 2 years of taxes from freelance work). The expense finder actually helped me identify over $4200 in legitimate business deductions I would have completely missed. The step-by-step guidance made filing my back taxes way less scary than I expected. I just finished filing all my back returns last weekend and already set up a payment plan with the IRS for what I owed. The whole process was surprisingly painless, and I ended up owing way less than I feared because of all the deductions it helped me find. Tell your friend not to wait any longer - getting it done feels AMAZING. The stress relief alone was worth it.

One thing your friend should know - if the IRS has been sending him letters, he should respond to those ASAP. When I was catching up on my back taxes, I kept hitting roadblocks trying to reach someone at the IRS for questions. Their phone lines are impossible! I wasted days on hold only to get disconnected. I finally used https://claimyr.com and it literally changed everything. They got me connected to an actual IRS agent in about 15 minutes when I had been trying for days. You can see how it works at https://youtu.be/_kiP6q8DX5c. I was able to verify exactly what years I needed to file and what documentation to have ready.

I need to publicly admit I was completely wrong about Claimyr. After posting my skeptical comment, I was still struggling to get through to the IRS about a garnishment issue, so I reluctantly gave it a try. Within 27 minutes I was talking to an actual IRS agent who helped resolve my issue! For comparison, I had spent over 4 hours on hold the previous week only to have the call drop. The IRS agent I reached was able to stop the garnishment process and set up a reasonable payment plan based on my income. For anyone in a similar situation - whether it's back taxes, garnishments, or any IRS issue - being able to actually speak with someone makes all the difference. Wish I had known about this sooner.

Your friend might want to look into IRS Form 9465 (Installment Agreement Request) once he files. The important thing is to get the returns filed even if he can't pay the full amount right away. Filing stops additional failure-to-file penalties, which are much higher than failure-to-pay penalties. Also worth noting - if your friend's income was below certain thresholds during those years, he might not actually owe anything, or might even be due refunds for some years! The IRS generally only allows refunds for returns filed within 3 years of the due date, so he should move quickly.

Don't forget about state taxes too! Depending on where your friend lives, he might need to file state returns for those years as well. Some states have their own amnesty programs or reduced penalty options for people voluntarily filing past-due returns.

Is your friend sure that his 1099 income was high enough that he needed to file? If he was making very little, he might have been under the filing threshold. For 2022, a single person under 65 didn't need to file if they made less than $12,950. That said, he still might want to file if he had any taxes withheld that he could get refunded.