is it possible to file bk if i never filed taxes?

[skiracy]

I might have posted in the wrong place earlier. Well my story is I've accumulated about 35,000 in cc debt and 30,000 in student loans. I have never filed taxes because i work for my parent's business and get paid under the table. So I have no tax returns. The business started doing really bad and they no longer can afford to pay me. I figured even with a new job it would be hard to even make the minimum payments or it would take me forever to pay these off. I want to file bk and work on paying off my students loans. What are your guys opinion on my situation? Thanks.

[keepmine]

If you made enough money that you were required to file a tax return, you need to get that taken care of ASAP.

[Ifonly]

I don't know about that. I'm not advising anyone to duck their taxes, however, this op needs to realize that she's not the only one with the problem. If she comes clean, so to speak, she's creating a problem for her parents and their business as well.

Did your parents claim you as a dependent on their tax return? Or was your social just nowhere with respect to tax filings?

This is way more complicated than simple income tax due by you. There is no easy way for you to claim this income without involving your parents and their business.

I don't have any good advice for you, I'm afraid. I would seek the counsel of a bk attorney and possibly a tax attorney.

[keepmine]

Well, if bk is the endgame, the trustee is very likely going to want to see a tax return for 08. Just noway around that if he made enough that filing a return was required.

[skiracy]

yes i was calimed as a dependent. I talked to one lawyer and he said i should calculate how much mad over the years and just file taxes. i am so worried right now i dont know where to start.

[JRScott]

Basically your in a hard spot.

The problem here is that you have 35k in CC and 30k in Student Loan debt without any proof of the ability to pay for it.

You most likely will owe the government taxes if you've never filed, but you need to get those filed.

Without them the CC and Student Loans if you claim you had no job might cry fraud in your filling out applications which will make the situation much worse.

So yes you need to file all the back taxes, even if you can't pay them right now.

[Ifonly]

Was that attorney a TAX attorney? You need to go see a CPA or a tax attorney. What you're missing here is that you just filing tax returns doesn't fix the problem. The people who paid you the money also filed tax returns that will be revealed as being fraudulent (I know that wasn't your intent and I'm not trying to be insulting, I just couldn't think of a better word). Not only do you owe income tax and FICA and state tax; but your parents did not claim you on any insurances that are calculated on payroll (WC, GL) and they filed you as a dependent when you probably made too much money to be treated in that fashion.

If you really must file for BK, you must go see a CPA to unravel your tax nightmare first.

Otherwise, try to get a job on the books, defer the student loans by maybe taking another class or apply for a hardship extension, pay the minimums and whatever extra you can, and wait it out. Heck, work two jobs.

[StartingOver08]

Ifonly has sound advice. Meet this tax problem head on right away. The most difficult thing with the IRS is penalties and interest. You are much better off facing it now, then letting the fees and interest continue to build.

Your most pressing issue right now is to get all of your tax issues worked out by getting a very knowledgable CPA. Do whatever you have to do to defer your school loans. Work out hardship agreements with the creditors or let the cc's default and handle those issues after you have filed your all of your tax returns.

Get a job that is paid on the books. Once the tax returns are filed, you might consider a Ch 13 and pay the amounts due to the IRS within the Ch 13 BK - but you will need an actual paying job to successfully complete the Ch 13.

Once you do this, you will feel much better because you will be in control of your financial life.

[Flamingo]

yes i was calimed as a dependent. I talked to one lawyer and he said i should calculate how much mad over the years and just file taxes. i am so worried right now i dont know where to start.

If you are being claimed as a dependent on your parents' tax returns, I am assuming your parents' income, etc. was used to obtain your student loans. The problem here is that while they paid you under the table to work for them, and you go back and recreate your income paid to you by them over the past few years, they did not withhold any state, federal or SS, etc. withholding as an employer would have done so there is big can of worms just waiting to be open here. You and your parents need to get sound legal advice as to what can be done here because the only thing right now working for the whole situation is that you were their dependent and to claim you as a dependent they have to provide over half of your support for a tax year. Income that you earn as a dependent is taxed after a certain level is earned (I believe it is around $5200 per year). You need a Tax Law lawyer/tax expert on this one before you do anything.

[HHM]

This is difficult, but at the same time not insurmountable. Honestly, the risk of the IRS putting 2 & 2 together on this issue is low. Meaning, if you file your taxes, the IRS is not likely going to connect the issue to your parents business (they are not actually that sophisticated).

[2xBK]

I agree with HHM, the IRS has multiple computer systems/databases that do not talk to each other, although they should. This is the federal government for you, and the states are no better. I speak from experience, being a former employer.

You can file your return(s) and there is little chance that IRS will question your parents about why they didn't withold taxes, social security, etc. There is always a chance they will but it's very unlikely to occur.

[Ifonly]

I would agree with you guys if the op didn't have to provide some sort of 1099 or W-2 with an employer ID. Where exactly is that going to come from? That's the red flag. And they do match those items using computerized systems at the SSA.

[anuta]

At tax time there are several communtiy based organizations that offer free tax preparation help--often community college, sometimes underwritten by AAPR. I hadn't filed my taxes in 3 years and went to tax help at a local community college and they really helped me get my tax returns in order. You might try to find out what organizations in your community offer this help and then try and get a hold of the supervisor and see if that person can line you up with one of their volunteers. I had quite complicated taxes and I couldn't believe how helpful the tax volunteer was. Just a thought on a place to start if you can't afford a CPA or a tax lawyer. If you can at least get your tax returns ready, you'll make better use of any information a tax lawyer will provide. What other posters have mentioned about penalties and interest is very true--they add up. Try to get your returns done so you know what the reality of your situation is. I know it's really frightening.

[anuta]

I would agree with you guys if the op didn't have to provide some sort of 1099 or W-2 with an employer ID. Where exactly is that going to come from? That's the red flag. And they do match those items using computerized systems at the SSA.

I don't think you have to have a W-2 or a 1099 to file your taxes. One would be a very good citizen indeed fessing up to having been paid in cash and then filing a tax return for that cash.

Another thought, depending on how the parents business took their payment, taxes might have been paid on the monies the OP was paid. For example, if the business took the money in from an invoice or by check and the business paid taxes on the money that was received--some portion of the taxes was being paid. If the payment to the business was received in cash, not on the books, and then paid to OP--well that's another problem.

[Flamingo]

I don't think you have to have a W-2 or a 1099 to file your taxes. One would be a very good citizen indeed fessing up to having been paid in cash and then filing a tax return for that cash.

Another thought, depending on how the parents business took their payment, taxes might have been paid on the monies the OP was paid. For example, if the business took the money in from an invoice or by check and the business paid taxes on the money that was received--some portion of the taxes was being paid. If the payment to the business was received in cash, not on the books, and then paid to OP--well that's another problem.

Paying state or federal taxes on incoming goods or services (invoices) or any other taxes involved is not the same as paying payroll taxes. When a business pays cash to a person under the table for work and does not report the income paid and, therefore, no submission of payroll withholding taxes, there is a big can of worms just festering in the sun waiting to explode. Ifs, ands or buts don't work. In this situation you have the son, being claimed as a dependent, doing work under the table for his parents' business. Since he is a dependent he is allowed to make a certain amount of money before he is taxed on the amount. The parents claim him as a dependent on their taxes. Also, the parents are giving him cash from the business and having to cover that cash up somehow. While that can of worms may not explode right away if he files taxes, it will explode eventually down the road if they check into the source of income for a dependent without a W-2 or 1099. I would certainly get correct legal/tax advice on this situation before doing anything.