Behind on taxes

[illbthereauto]

I have been running my mobile mechanic business for just over 2 years now but last year do to COVID and things related I did not due hardly any sales. Probably only 4-5k so I was under the impression I did not need to file if under 6k gross annual sales. Unfortunately due to my inexperience and lack of attention I have yet to set aside or prepare for quarterly or any taxes if that matter. Not sure as to how I need to go about filing for last 2 yrs especially since finances are extremely tight due to wife not working and barely making bills & rent let alone set anything aside for Uncle Sam. I realize I'm probably going to be screwed and am afraid. This whole tax thing is going to be the end of being a business owner and possibly put my family out on the streets but I know the longer I wait the worse it's going to be. Also I live in Oregon so a lot of the debt consolidation company's and such don't operate or assist Oregon residents for some reason. Any ideas or help would be greatly appreciated and welcome

[Donnie-M]

@illbthereauto well the first thing I can tell you is this, The longer you put it off the worse it gets.  Did you file a tax return in the past 2 years and just not report the 4-5k?  If that is the case then you might face some penalties and will need to file an amended tax return if you got any sort of refund like earned income credit.  You will have to pay back any money you got that wasn't due to you.  Now, if you only earned 5k then you won't owe much since the standard deduction is more than you earned.  If this was a side gig and you did have income from somewhere else, then that is a horse of a different color.  I would strongly suggest just go find you a real accountant and lay it out there and they can clean this up for you.

The good thing is that this does happen and the IRS and I am sure Oregon will set up an affordable payment plan with you IF you get all the legal requirements taken care of and look like you are trying to be honest.  There is always a chance nothing is ever said, but the penalty for not filing or declaring is way worse than the actual taxes you would owe.

One final note, if it was "sales tax" for the state that you are talking about that you didn't pay, they will get you for that crap.  Don't ever not pay sales tax to the state as required.  You don't see people go to jail for income tax evasion like you do for stealing state sales tax because that is how they view it.

But the overall thing is, it is not as bad as it may seem.  Just get a tax professional and get it fixed, and be honest with your tax professional, don't leave anything out.