Struggling with Unpaid Back Taxes - Need Advice

I'm completely mortified sharing this, but I'm at my wit's end. The only people who know about this situation are my wife and an expensive tax consultant I hired in California. Here's what happened: About 10 years ago, I relocated to a different state to be with my now-wife (we've been married for 7 years). My employer at the time kept me on as a remote independent contractor in my new state. For 4 straight years, I didn't file or pay any taxes. I know how incredibly stupid this sounds. I was younger and naively thought I could just save up the money and pay everything when the time came. Please don't lecture me - I already mentally berate myself constantly. It's gotten so bad that some days I can barely function from the anxiety and despair. We then moved to New York for 4 years where I was still working as a contractor. I still haven't resolved this tax situation and it's crushing me. I don't even know where to begin to get out from under this mess. Any advice from someone who's been through something similar would be appreciated. I'm desperate.

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18 comments

Diego Flores

•8M

First, take a deep breath. You're not alone - I've helped many clients through similar situations, and there are clear paths forward. Start by gathering any income documentation you have for those years - 1099s, bank statements, anything showing what you earned. You'll need to file returns for all missing years using Form 1040 for each year. Then you'll need to address the tax debt itself. The IRS generally has collection options that can help. Look into: 1) An installment agreement where you pay monthly, 2) An Offer in Compromise if you qualify, which lets you settle for less than the full amount, or 3) Currently Not Collectible status if you have financial hardship. The most important thing is to get into compliance by filing all returns, even if you can't pay everything immediately. This shows good faith. The IRS is generally more interested in bringing people into the system than punishing them.

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Diego Flores

•8M

The penalties and interest do add up, but they're not designed to be impossible to overcome. For failure to file, you'll face about 5% of unpaid taxes per month (capped at 25%), and failure to pay penalties of 0.5% per month (capped at 25%), plus interest on the total. However, there are options for penalty abatement under First Time Abatement policy or Reasonable Cause provisions, which could significantly reduce what you owe. In many cases, even if the total seems overwhelming, an installment agreement will make it manageable. Don't let fear of the total amount prevent you from taking the first step.

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Sean Murphy

•8M

I was in a somewhat similar situation (though only for 2 years of unfiled taxes). What really helped me was using taxr.ai to organize all my documentation and get clarity on exactly what I owed. You upload your tax documents and financial records to https://taxr.ai and it analyzes everything to give you a comprehensive picture of your tax situation across multiple years. After spinning my wheels for months, this tool helped me understand exactly what I needed to file, what I could expect to owe, and what payment options might be available. It even generated draft returns for me to review with my accountant, which saved me thousands in professional fees since most of the grunt work was already done.

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Sean Murphy

•8M

It absolutely works with older tax years. The system is built with historical tax data going back many years, so it can handle returns from a decade ago without issues. It properly applies the tax laws and rates that were in effect for each specific year, which is crucial when filing late returns. Yes, it does handle multi-state situations. That's actually one of its strengths. It can process both federal and state tax requirements, including situations where you've lived or worked in multiple states during the same tax year. It helps untangle those complex residency and income sourcing issues that often trip people up.

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Zara Malik

•8M

Just wanted to follow up and say I ended up trying taxr.ai after my skepticism. I had unfiled taxes from when I worked in both Illinois and Wisconsin during the same years, and it actually did an amazing job sorting through everything. The system identified deductions I didn't know I qualified for, and gave me a realistic picture of what I owed (which was less than I feared). Having all the documentation organized really helped me when I finally went to resolve everything. For anyone dealing with back taxes across multiple years or states, it's definitely worth checking out.

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Luca Marino

•8M

One thing nobody's mentioned yet - if you're ready to move forward with resolving this, you'll probably need to speak with the IRS. I spent WEEKS trying to get through their phone lines when I was fixing my own tax situation. What finally worked was using Claimyr (https://claimyr.com) - they have this system that holds your place in the IRS phone queue and calls you when an agent is available. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was so skeptical at first, but when you're dealing with back taxes, actually speaking to someone at the IRS makes a HUGE difference in resolving things quickly. They helped me set up a payment plan that actually works for my situation instead of just guessing at what to do.

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Luca Marino

•8M

It works by using a system that navigates the IRS phone tree and stays on hold for you. Once an agent picks up, it automatically calls your phone and connects you directly to that agent. No more spending hours listening to hold music only to get disconnected. They don't need your sensitive information at all. You're not giving them tax details or SSNs - they're just securing your spot in the phone queue. It's basically like having someone stand in a physical line for you. When you're dealing with complex tax issues like back taxes, actually getting through to a human at the IRS can make the difference between resolving your situation or remaining stuck for months.

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Mateo Perez

•8M

I have to eat my words about Claimyr. After my skeptical comment, I was still desperate to talk to someone at the IRS about my payment plan options, so I decided to try it anyway. It actually worked exactly as described - I got a call back in about 2 hours after previous attempts where I'd waited on hold for 3+ hours and never reached anyone. The IRS agent I spoke with helped me understand my options and I was able to set up a payment plan that works for my budget. Saved myself an entire day of frustration. For anyone dealing with serious tax issues where you need to actually speak to an IRS representative, it's definitely worth it just for the peace of mind.

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Aisha Rahman

•8M

The most important thing, OP, is to start filing current tax returns correctly going forward. Don't let this year become another unfiled year while you're dealing with the past ones. I say this from experience - each new unfiled year just digs the hole deeper. I made this mistake and ended up with 6 years of unfiled returns. The way I dug out was to: 1) File current year properly 2) Work backwards on the old returns one by one 3) Call the IRS and get on a payment plan Remember that independent contractors should typically be making quarterly estimated tax payments. Set that up right away for 2025 so you don't keep adding to the problem.

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Aisha Rahman

•8M

You're absolutely right about state taxes being separate. Each state has its own tax authority and payment arrangements. You'll need to contact each state where you owed taxes to work out separate payment plans. For multi-state situations, I usually recommend tackling the federal issues first, then addressing each state in order of highest debt to lowest. Many states offer voluntary disclosure programs that can reduce penalties if you come forward before they contact you. It feels overwhelming at first, but breaking it down step by step makes it manageable.

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