Taxes Taxes Taxes

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This past year I had a customer come to me who didn’t file for several years. One year, he received advise from his CPA to not file due to his income being what it was with the amount of children he had. This advice had lead him not to file for several years. In the following years, the IRS filed his returns for him, causing to owe a couple hundred of thousands of dollars and eventually filing a bank levy. No doubt that this was an intense and scary event to happen.

After looking further into his past years, what the IRS did file and what should have been filed we noticed a few issues. The IRS, does not include deductions and credits when they file for you. They did not include his kids or his wife. Also, one year, there was a real estate property that was sold and was counted as straight income. This could actually be eliminated entirely, it being a primary residence.

We fixed the issues and went from owing in excess of $300k to getting close to $30 refunded to him. Not only this but there was between $15-$20k that would have been refunded to him on top of the $30k but cannot be claimed due to the IRS 3 year statute of limitations.

Although the CPA was correct, in that he didn’t have to file since he did not end up owing, it isn’t always the smartest move. Due to this advice my customer had to go through the headache of dealing with an IRS bank levy and having to hire us to resolve this issue and losing some refund. Make sure this doesn’t happen to you. Make sure that you get advice from an experienced tax professional and do your taxes right this year.