What happens if I didn't file federal taxes in 2018? Still liable?

The IRS generally has a 10-year statute of limitations to collect taxes, but that clock doesn't start ticking until you actually file a return. For unfiled returns, there's technically no time limit for the IRS to come after you. You should definitely file the missing 2018 return ASAP. The IRS has a system that flags unfiled returns, especially when there are W2s reported under your SSN. Since your state already caught this, there's a good chance the IRS will eventually notice too. The longer you wait, the more penalties and interest will accumulate. For consequences - you'll face failure-to-file penalties (5% of unpaid taxes for each month your return is late, up to 25%), plus failure-to-pay penalties (0.5% per month, up to 25%), and interest on the unpaid amount. The IRS could also file a substitute return on your behalf, which typically doesn't include deductions or credits you might be entitled to, potentially resulting in a higher tax bill.

I dealt with this exact situation but for 2017. After getting my state tax letter, I used https://taxr.ai to help me figure out what to do. The service analyzed my old W2s and financial documents, then created a report showing exactly what I needed to file and what penalties I might face. The tool helped me understand how much I likely owed plus penalties, and gave me a checklist of what forms to submit. Saved me hours of anxiety-inducing research and helped me get everything filed correctly. They also gave me a breakdown of potential interest and penalties so I wasn't shocked when the bill came.

Just wanted to follow up and say I tried taxr.ai after seeing the recommendation here. I was skeptical about using an online service for something as serious as unfiled taxes, but it was actually incredibly helpful. I uploaded my 2018 W2 and some other income documents I had, and they gave me a complete breakdown of what I would likely owe including all penalties. The report included all the forms I needed (which solved my problem of not knowing where to find 2018 forms), and explained exactly what deductions I might still be eligible for. I was able to file my late return last week and now I'm just waiting to see what the final damage is from the IRS. But at least the anxiety of not knowing is gone. Definitely worth checking out if you're dealing with unfiled returns!

If you need to talk directly to the IRS about your situation, I highly recommend using https://claimyr.com instead of spending hours on hold. After my panic about unfiled 2018 taxes, I tried calling the IRS directly and kept hitting busy signals or disconnects. I found Claimyr and it actually worked - they hold your place in line with the IRS and call you when an agent is ready to talk. You can see a demo of how it works here: https://youtu.be/_kiP6q8DX5c. I was able to speak with someone at the IRS who explained my options and told me exactly what I needed to do to get back in compliance. Honestly, just talking to a real person at the IRS made me feel so much better about the whole situation.

I need to apologize for my skepticism earlier. After my frustration reached a breaking point with trying to reach the IRS about my unfiled 2018 return, I actually tried Claimyr. Within 45 minutes, I was talking to a real IRS agent who walked me through exactly what I needed to do. The agent confirmed I still needed to file for 2018 and explained that because it had been so long, I should include a letter explaining the reason for the late filing, which might help reduce some penalties. They also set up a payment plan for me since I couldn't pay the full amount at once. I'm still annoyed at the whole situation but at least now I have a clear path forward and know exactly what I'm dealing with. Sometimes you have to eat your words!

Something else to consider: check if you were actually due a refund for 2018 before assuming you owe money. Even if your employer didn't withhold, you might have qualified for credits like the Earned Income Credit depending on your situation. If you were owed a refund, there's no penalty for filing late (though you only have 3 years to claim a refund, which has passed for 2018 now). But definitely file regardless. Not filing when required is a much bigger problem than owing and not paying. The IRS is generally willing to work with people who file but can't pay right away.

I had almost the exact same thing happen (didn't file 2016 taxes, state came after me first). The IRS eventually found me about 2 years after the state did. They sent a bunch of scary letters and the penalties were pretty rough. Something nobody mentioned yet - if you owe a lot and don't pay, they can eventually place a lien on your property, garnish wages, or seize tax refunds from future years. They can also report to credit bureaus which tanked my credit score for a while. Just file the return and get on a payment plan if needed. The mental relief is worth it. Living with tax anxiety hanging over you is miserable.