I have a question about filing taxes late.
I'm Canadian, and I worked in the US from 1999 to 2003. I filed all US taxes on time and got my refunds in 1999, 2000, and 2001.
In early 2003, I moved back to Canada. I was scrambling on April 14, 2003 to get my taxes filed (I have Turbotax 2002). Some of the needed paperwork and receipts were still in boxes being shipped. I knew that I was owed a refund, so I didn't file, I waited for the boxes to arrive.
I know that I should have filed on time. Barring that, I know that I should have filed for an extension.
My computer hard drive died, life took over, and I never filed. It grew into this major procrastination problem. This might sound unbelievable, but I actually went into psychotherapy for this procrastination problem. By the time I sought therapy it was 2008. I had not filed the US tax returns (federal and state) for 2002 and 2003. I hadn't even filed tax returns for Canada (Federal and Provincial for 2003 to 2008 either).
I started to get the problem under control. As of now, I've filed all of my Canadian (Federal and Provincial) returns and I'm completely up to date.
In Canada, the law is that you're not subject to a penalty for not filing on time unless you owe them money. If you're owed a refund then you're simply depriving yourself of the interest.
I had read that the law was the same in the USA but I wasn't certain. Then I came across this recent article on CNN which seemed to confirm this.
I'll quote one paragraph:
"Many people fear that a tardy return will involve penalties, headaches or even jail time. But the reality is that if you are one of the majority of Americans owed a refund this year, the Internal Revenue Service can't touch you. And in some rare cases, the IRS might even owe you more money."
So my question is how should I proceed? The returns are complete, printed, and ready to be mailed. I am owed a refund for each year, state and federal. At this point I certainly don't expect to get a penny of it (would be nice though), I just want to square things away and go back to being a law abiding person. Originally I was thinking that I should contact a law firm and go through them. I don't want to spend the $1000 unnecessarily, but I see all those ads on TV for law firms promising to deal with the IRS for you, and you hear all these IRS horror stories.
I know I should have filed on time. In your reply feel free to spend all the time you want beating up on me and telling me what a bad person I am for ignoring this so long. I know. I can't feel any worse about it. But I've addressed the problem and I've gotten in 8 years of returns, and collected refunds. I have two more to go.
Although I didn't owe any money, they didn't have my Canadian address (although the US credit agencies all did) so it's possible they gave me a deadline to file or face a penalty and now there's penalties on top of penalties for not filing. I guess my biggest fear is sending the returns in and being told that they owe me a refund of $1,000, but I owe them a penalty of $10,000 for not filing and $100,000 for interest on the penalties and penalties on the interest and they're about to seize all my assets now that they know where I am!
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