Where to start with back taxes for self-employed friend who hasn't filed in a decade?

I help people with tax problems like this frequently. First, take a deep breath - this is fixable! The IRS actually deals with non-filers all the time. Start with the most recent tax years (2021, 2022) and work backward. The IRS is most concerned with recent compliance. For missing documentation, bank statements can be incredibly helpful - have your friend request these from his bank going back as far as possible. For the missing records, reasonable estimates are acceptable, but document your methodology. For a massage therapist, you can estimate income based on average clients per week × average fee, then estimate business expenses as a percentage. Keep notes on how you arrived at these figures. Don't submit all returns at once. File the most recent year first, then space out the others by 2-3 weeks. This gives the IRS time to process each return before receiving the next.

After reading this thread, I wanted to share something that saved me tons of time when I was catching up on unfiled returns last year. I used taxr.ai (https://taxr.ai) to organize all my scattered financial records. You just upload bank statements, receipts, or whatever documentation you have, and it extracts all the tax-relevant transactions into organized categories. For your roommate's situation, it would be perfect since he's self-employed and probably has mixed personal/business expenses. It helped me identify deductions I would have totally missed when I was catching up on my back taxes as a freelancer.

Just wanted to update after trying taxr.ai that someone mentioned above. It actually worked really well for my situation. I uploaded three years of bank statements and it organized everything into business vs personal transactions that I could easily review. Found about $8,200 in business expenses I had totally forgotten about! My tax preparer was impressed with how organized everything was. Definitely made catching up on my unfiled returns way less stressful than I expected.

If your friend gets notices from the IRS during this process (which is likely), don't panic! I spent WEEKS trying to get through to the IRS about a similar situation last year. After 23 attempts, I found Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in under 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS phone system is designed to hang up on you when call volumes are high (which is ALWAYS). Claimyr bypasses that by constantly redialing until you get through. Saved me days of frustration when dealing with notices for my unfiled years.

I need to apologize and correct myself about Claimyr. After dismissing it as a scam earlier, I was still desperate enough to try it for my own IRS issue. It actually worked exactly as described. Got connected to an IRS agent in 38 minutes after spending literally weeks trying on my own. The agent was able to put a temporary hold on collections for my unfiled returns while I get everything submitted. Saved me from a wage garnishment that was about to hit. If your friend gets notices during this catch-up process, being able to actually speak to someone at the IRS makes a massive difference.

One thing nobody's mentioned yet - your friend should request his Wage and Income Transcripts from the IRS for all those years. This will show all income that was reported to the IRS on 1099s, W2s, etc. This gives you a starting point to know what income the IRS already knows about. You can request these transcripts online at irs.gov or by filing Form 4506-T. This helps ensure you don't miss any income that was reported to the IRS, which would definitely trigger notices or audits.

Just wanted to add that I was in a similar situation (6 unfiled years as a freelancer) and the process wasn't nearly as scary as I thought. Definitely start with current year and work backwards, and be proactive about setting up payment plans if he owes. The IRS is actually pretty reasonable if YOU reach out to THEM before they come looking for you. It's when you ignore their notices that things get ugly with liens and levies.