Can’t File Past Tax Returns, Now What?

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We recently received questions from a USTaxAid community member who had not filed his tax returns for the past few years. The reason was because he was stuck with some tax planning and compliance issues. He needed answer first, before he could file.

It’s a long narrative, so I’ll summarize the bullet points:

  • Member is disabled with no income.
  • Member had losses from a hurricane and has not filed since, because he doesn’t know how to carry losses forward.
  • Member’s wife worked for 2 years and now is unemployed.
  • Member believes he has refunds coming, but knows he has to file soon to get the refunds or they will be lost.

There is more detail, but sometimes in long stories you can get lost in the details. Let’s just go with that summary.

Please check out disability income qualifications. I’m not familiar with the program requirements, but it seems like this could be a good fit.

On the loss from the hurricane: There are going to be two different types of losses. First, you may have casualty losses. These would be personal losses.
You also have a couple of businesses that were lost in the hurricane. The amount of loss is calculated as what your basis was. For example, if you had equipment worth $100,000 on the books (after depreciation) and it was destroyed, then that is business loss.

I wasn’t sure which hurricane caused the loss, but my guess is that you probably were in a federally-declared disaster area. There are additional write-offs available if you are in a federally-declared disaster area:

As you indicated, you’ll want to get your tax returns filed soon. The federal statute of limitations is three years for refunds. That means the only open years right now are 2010, 2011 and 2012. However, 2010 will soon be closed. If you had not filed prior to that time, you are still required to file the returns. But if there is a refund coming to you, you probably won’t get it. Normally, we have our clients file going back 6 years if there have been a lot of.

You also asked how to find out what tax information the IRS has on file for you. IRS Form 4506-T can be used to request information on your account including past tax returns, adjustments by the IRS and income returns they have received related to you (Form W-2, Form 1099, etc). However, if you haven’t filed, remember you are now putting the IRS on notice that you’re pulling information. Be prepared to get those past due returns filed quickly after sending in this notice.

There is a lot of work ahead of you and a short period to get it done in. It won’t be easy, but it is necessary. Good luck!

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