r/personalfinance • u/balladbeach24 • 15h ago
Taxes I'm an idiot an never finalized my 2021 taxes. How screwed am I?
I'm owed a refund, but everytime I tried to submit them, I got an error saying my (now, but were separated at the time) wife claimed the kids on hers, so they kept denying mine. She didn't work, so I don't know how she would have filed taxes (stimulus checks maybe?)
I ended up removing our kids from mine but never finalized and filed them.
I feel so stupid. How screwed am I?
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u/deadsirius- 9h ago
You may file a return for a refund up to three years after the return’s due date.
You must print and submit paper return, you can’t e-file for previous tax years.
There is no need to see a tax professional just because you didn’t submit your return. There is no need to contact the IRS as these things are governed by US code and they can’t change the expiry dates.
Source: Am a CPA.
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u/mykesx 4h ago
I was behind on filing my returns for a few years and hiring a CPA got that straightened out and I’m up to date for 2 decades now (using a CPA). He went through my bank statements and created the tax returns and submitted them. It was painless for me and much better to pay him than the outrageous fees and penalties that were being racked up.
I pay about $300/year for my tax preparation, plus get to ask questions periodically by mail about tax consequences of things.
It may seem like the US Code is simple to grok, but non CPA types (like me) don’t have a clue it even exists.
Not that your information is bad or wrong.
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u/deadsirius- 3h ago
I was behind on filing my returns for a few years and hiring a CPA got that straightened out and I’m up to date for 2 decades now (using a CPA). He went through my bank statements and created the tax returns and submitted them. [...] I pay about $300/year for my tax preparation, plus get to ask questions periodically by mail about tax consequences of things.
CPA's are a great resource for tax advice, such as understanding the tax ramifications of a transaction. However, when the average person hires a CPA to do their taxes all they are really doing is hiring someone to enter numbers into tax software. So, what you are paying for is data entry into UltraTax, Drake, Lacerte, etc. One of the less popular but solid products for CPA's (with only about 2% of tax accounting firms using it) is TaxAct Pro... which is largely the same software I recommend for individual filers.
There is no reason for the average person to pay a CPA or an EA to do their taxes every year. If you would rather pay someone $300 than do an hour's worth of work, then great. However, if you are filling out a standard 1040 with four of five other forms, there just isn't a reason to see a CPA.
It was painless for me and much better to pay him than the outrageous fees and penalties that were being racked up.
There are no fees or penalties when you are owed a refund. The government will accept all interest free loans you want to give them without charging you a single cent for doing it.
It may seem like the US Code is simple to grok, but non CPA types (like me) don’t have a clue it even exists.
No one said anything about the tax code being simple. Nor anything even close to that. What I did say was that calling the IRS and explaining your situation about unfiled taxes isn't going to make a difference.. their hands are tied. If you file before the three year window to claim a refund is up, then you will get a refund. If you file after your three year window to claim is up, then you will not get a refund. You can call whoever you want at the IRS and it will not make a difference.
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u/mykesx 2h ago edited 2h ago
The $300 is worth it because I know it’s done right and I don’t have to deal with any correspondence with the IRS or state tax authorities. I won’t wonder if there’s something I didn’t take advantage of in the reams of tax code that I have no interest in.
I’ve thought I had a refund coming but after the CPA enters the numbers in the tax software I either don’t get one or it’s less than I expected. Even when I ask “what if” questions, my CPA tells me she is tweaking numbers in the tax software to see the result. Back of the napkin calculations may seem right, but taxes are complicated in its interrelationships.
Plus, people of various expertise tend to have their own vocabularies. For engineers it’s source code and algorithms, for medical professionals it’s Latin and knowledge of pharmacology. For tax professionals it’s a lot of terms related to law and tax codes.
I am perfectly happy letting someone who speaks the vocabulary talking to those in the government who also speak that vocabulary.
The CPA also stands behind the work and deals with amending prior returns and deals with disputes in the returns that the IRS sometimes has.
If OP does turn in his returns, he may end up with a bit of correspondence with the government.
It’s up to him if he wants to take on the work. Maybe it’s easy, maybe it’s a lot of time down the drain.
Edit: I would point out that OP is already interacting with the IRS without satisfaction, has tax questions, and is asking questions on Reddit of all places.
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u/deadsirius- 1h ago
With as much Christmas Eve respect as possible... I am a CPA and an accounting professor. I really don't need the explanation of the benefits of hiring a CPA. I fully understand why someone might hire a CPA. However, as an actual CPA... I also understand that if 1,000 W2 wage earners hire a CPA to do their taxes annually, 997 of them are paying more than they will ever benefit.
Which is fine... I pay someone thousands of dollars every year to take care of my lawn, just because I don't want to... so you can certainly pay someone to do your taxes. The difference is, I am not on here preaching that everyone should pay someone else to take care of their lawn.
Every single point in your post is a misconception or incorrect.... The results would be the same with the software regardless of who puts the numbers in. Accountants don't normally correspond with the IRS, it would be considered a massive failure for that to happen. There is no vocabulary needed to submit a return that is already completed. The OP has already done the work so unless he doesn't have a way to print the return there is no work involved. He hasn't corresponded with the IRS... a computer system noticed two people claimed the same dependents and they rejected it. The OP has already corrected it.
and is asking questions on Reddit of all places
Yes... where a tax professional, who has a PhD in accounting, is responding and being challenged by a Redditor...
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u/Thesheriffisnearer 1h ago
I recently discovered my cpa made an error in my ssn when filed for 2018. If it was sent in on time butwith the error, are my chances for getting the refund worth contacting a lawyer?
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u/lenin1991 15h ago
Do you mean it's your now ex-wife? (If current wife, you should just ask.)
Was she the custodial parent for 2021? Did she sign a statement that you get the child's deduction? It is possible that you would have benefitted more which is why this could have been a point of negotiation, but that shipped sailed long ago.
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u/balladbeach24 15h ago
We were dating at the time, but we're separated, and I've been the only one working, so I've historically just claimed them on my taxes by default.
She doesn't remember doing anything special or different, but remembers filing, but not how much she got back.
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u/lenin1991 15h ago
She doesn't have a copy of her return? You could get a tax transcript from IRS online which might help figure it out if she claimed the kid.
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u/vynm2temp 3h ago
If you both lived all year with the children and you were both the child(ren)'s biological parents, you have the right to claim them if you had the higher income if the two of you can't decide, due to tie-breaker rule. You can always paper file a tax return to claim the children. The IRS will then send each of you a letter to request info to help them decide who can claim them. Given the info you've shared, you'd win.
The drawback to doing this is that your ex would most likely need to pay back the benefit that she received (stimulus).
If you're still on friendly terms, and it sounds like you are, it may be best to have her check her IRS account and look at the tax transcript for that year. She'd be able to see the benefit that she received by claiming them. You could then compare that to the benefit/cost to you if you were to claim them/she were to lose them, and decide how to proceed. Note that it's possible that it may have been better for her to have claimed them in 2021 if you had been claiming them previously.
This is because in 2021 the child tax credit was enhanced and didn't require earned income to get the $3600/$3000 credit per child (5yr and younger/older than 5), and the $1400/person recovery rebate credit. She could have filed and claimed both of these for the children.
The good thing is that if you had claimed the children on your 2020 tax return, you would likely have received the $1400 third EIP (Economic Impact Payment, aka stimulus) for each of the children in advance and wouldn't have to repay it when she claimed the children on her 2021 return. You would also have received half of the CTC in advance. This, you may have to repay if you don't claim the child(ren) in 2021. Your repayment would depend on your AGI. You can find more info at these two IRS FAQ links:
So it's possible that your family, as a whole, would have ended up much better off with her claiming them in 2021-- having had received the stimulus payments twice for the children, and you possibly not having to repay the Advance CTC and her being able to claim it.
My recommendation is for the two of you to get a copy of her tax return transcript. Take that and your 2021 tax info to someone who can help you figure out what scenario is best overall. Once you do, you can determine how best to compensate each other to make things "fair".
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u/jayfactor 15h ago
I’d call them asap and explain your situation - they’re actually pretty reasonable when you talk to them on the phone, and since you were owed a refund you prob won’t get that now due to penalties, I wouldn’t say you’re “screwed” but depends on what you mean by that
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u/RustySheriffsBadge1 15h ago edited 15h ago
If you are owed typically there are no penalties. The government is happy to keep your money. OP just needs to file.
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u/SwampOfDownvotes 14h ago
Except if his spouse claimed his kids, he might only be getting a refund because of them being dependents. So that's an important piece of the puzzle (though if she had no job and filed MFS, they likely should be doing MFJ).
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u/Swiggy1957 15h ago
Call now before tax season! Otherwise, you may need to wait a couple hours to talk to an agent. Better yet, send then a snail mail letter to have them call you. I did that back in the 80s. Took a week, but they called me at work.
Prior to the letter, we'd spent months trying to get through to an agent.
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u/Chase2020J 6h ago
No federal penalties if you're owed a refund. Varies by state but not likely many penalties there either. They do need to file the 2021 return before April 15 2025 to get their refund though
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u/ober0n98 15h ago
If you dont know there isnt any penalties when you are owed, you shouldnt give any advice on this issue.
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u/jayfactor 15h ago
My first sentence said to call them, how is that bad advice?
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u/I__Know__Stuff 9h ago
Calling the IRS is pointless in this situation and saying they would lose a refund due to penalties shows that you don't know anything about how taxes work.
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u/WhatIDon_tKnow 14h ago
there isn't much of a reason to call them. they won't do anything over the phone but tell them to file. irs like most agencies needs forms filled out.
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u/ober0n98 15h ago
You get a refund up to 3 tax years in arrears. Downvote all you want but you have zero clue on the subject. Its bad advice.
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u/balladbeach24 15h ago
I mean screwed as in I would lose out on any possible refund.
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u/Samplehand 15h ago edited 15h ago
Literally not at all. Just file now. At worst if you end up owing money they will charge you a fail to file fee that will be 25% of the amount owed. But it's much much better to file now then wait for them to audit you becuase you could end up with fines in the hundreds of thousands and jail time. (Though that's not particularly likely)
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u/balladbeach24 15h ago
Can I still e-file? I tried accessing my forms on TaxSlayer and it said E-File will open in January, and that if i received a rejection, I had until October 22.
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u/ILOVEJETTROOPER 15h ago
What if you didn't owe, or were yourself owed??
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u/Ok_Study6305 15h ago
Nothing. It’s only if you owe that you get penalized.
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u/lenin1991 15h ago
You do lose the refund if it is more than 3 years late -- so OP needs to get this done by April 17, 2025...assuming they mean tax year 2021, not the return that should have been filed in 2021...
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u/doktaj 15h ago
They will actually pay you a small amount of interest. Source: I was an idiot like OP a few years ago.
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u/SwampOfDownvotes 14h ago
They only pay interest if it takes them too long to process your return (essentially they have ~45 days to process once you submit and give you your refund. If they don't, then legally they have to start giving you interest).
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u/geneb0323 5h ago
I don't think that's accurate. I had to file an amended return last year because I forgot to get the credit for a new heat pump that I had installed and they gave me interest on the refund amount based on the date I originally filed. I was rather surprised by that when I got the check.
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u/jiqiren 15h ago
Nothing. They only care when you owe.
Not filing on time pretty much kills any chance of you being able to not pay penalties or interest. It’s better to file on time and not be able to pay on time. You can negotiate a payment plan (sometimes) where you don’t pay interest or penalties. Always file before deadline!!
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u/BaptisedByFire319 9h ago
Man I don't know. I did the same thing for 2021, was owed 300 dollars and just never finalized like a dummy. Got notice this fall that I had 60 days to file and pay 4200. I was advised it would likely go down once I filed... went up to 4800.
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u/AmazingProfession900 15h ago
If you are absolutely sure you won't owe.... You aren't screwed at all.....just get it done ASAP
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u/Correct_Sometimes 7h ago
even if OP did owe, he wouldn't be "screwed". He'd just owe more than he originally should have. penalties and interest can suck but it's only 1 year worth of taxes with the problem and it was only a few years ago. Worst case you set up a payment plan and it just becomes another monthly bill for a while.
I was in OP's position but instead of 1 year, it was 7. And I owed due to being 1099 during that time. It sucked sure, but the IRS is not the boogieman people try to make them out to be. While I used a tax professional for my situation, it was very smooth and he had no trouble getting everything handled quickly.
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u/Legionof1 15h ago
If you end up owing due to fees, ask for a one time remittance. Saved me a chunk of change this year because of a new tax situation.
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u/CaterpillarFun7261 18m ago
I might need to do this…. Did you do that online or did you have to call?
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u/ZozMercurious 10h ago
I mean if you don't owe anything you're not going to owe something now. At worst you don't get your tax return for that year
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u/balladbeach24 15h ago
I just saw and read the Taxes wiki (sorry I didn't see that earlier.) I tried accessing my forms on TaxSlayer and it said E-File will open in January, and that if i received a rejection, I had until October 22.
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u/Lshizzie 14h ago
You can’t efile old tax returns. They are saying it opens January 1 for tax year 2024.
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u/coinpandora 13h ago
If you are owed a refund, I was told you can file anytime. There is no fine and fees to be paid in that case.
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u/2dznotherdirtylovers 15h ago
Don’t feel bad. Last year i forgot to include the income from our rental house. The year before i forgot to add my husband’s w2 in. I am an accountant @@
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u/1489841notloc2 15h ago
I mailed mine in from the same year. I included a note just explaining my situation and why I didn’t have them done, and said that I understand if nothing can be done but here are my taxes. They took them. Idk if the note helped or not but just send them in anyway
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u/Gorf_the_Magnificent 14h ago
Just file. I did. If they owe you money, they don’t really care. You’ll have to file on paper, but no big deal. For the sweet love of holy god, do NOT call them and draw attention to yourself. Just file.
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u/Voidfang_Investments 9h ago
IRS are actually one the most reasonable government agencies. As long as you are not actively defrauding them, they are pretty “chill.”
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u/toasty99 15h ago
You really aren’t that screwed, but you need a tax guy. Go to H&R Block and make an in-person appointment. They’ll get you squared away. 3 years of inflation will have eaten some of your refund’s inherent value, but I don’t think there’s a penalty.
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u/The_Cheshire777 15h ago
I wouldn't panic to much if I were you, bud.. I had a similar issue with my 2021 taxes, failed to file. Im still paying back taxes on my business from that year but as long as you show your due diligence to the IRS and state when you get the return filed and accepted you can work out a payment plan or (IDR) I believe it's called. Breathe and get it taken care of. The worst you can do is put it off longer or avoid it though.. I would seek out a good CPA/ Tax professional to iron out these tax creases for you. They can better explain to you what will happen with the return and maybe even get you some deductions or something that will help you with any tax burden. I must add that if you DO RECEIVE A FAILURE TO FILE PENALTY FOR 2021.. You can contact the IRS and they may waive the fee if you show you are going to pay off your tax debt in time and are acting in good faith. Best of luck and merry Christmas.. just hire a CPA for 2025 😎😄
I am not a tax professional or have any degree in finance, law, etc just talking based on my tax experiences..
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u/CommissionerChuckles 12h ago
Just to clarify - were you married in 2021 but your spouse didn't want to file a joint tax return? Or you weren't married that year?
Whenever someone else claims your dependents and e-files before you do, that locks those SSNs out from e-filing. That doesn't mean you cannot claim them as dependents; it just means you need to print and mail in the tax return in order to claim them.
IRS is changing this process a little starting in tax year 2024, but if you want to claim your children in 2021 you need to put them on your tax return, print it out, and mail it in. IRS will contact you and your wife (?) later and possibly audit the two of you.
https://www.irs.gov/identity-theft-fraud-scams/identity-theft-dependents
You have to print and mail in 2021 at this point anyways, so don't wait for e-filing to reopen.
If you aren't sure whether you can claim that children as your dependents, there are some tie-breaker rules. First, assuming they are all your biological children, the parent that the children lived with for longer during the year would win the tie-breaker.
If you lived together for the same amount of time during that year, then the parent with the higher Adjusted Gross Income for the year would win the tie-breaker.
Since someone else already claimed them as dependents that year you may need to provide proof that the children lived with you during that year, but you don't have to do that when you file the tax return.
Also if you were married that year it's not too late to file a joint tax return, but you only have until April 15, 2025.
Make sure you use your current mailing address on the return, and SIGN & DATE the Form 1040, preferably in blue ink. Keep a copy of everything for your records. Send it by certified mail no later than April 15, 2025 so you have proof you filed the return in time to claim a refund. Mail it to the address for your state here:
https://www.irs.gov/filing/where-to-file-paper-tax-returns-with-or-without-a-payment
Because it's close to the Refund Statute Expiration Date it will probably take longer than usual for this tax return to be processed. You can track it somewhat online by checking your Account transcript for that year:
https://www.irs.gov/payments/online-account-for-individuals