One of the biggest fears people have when they haven’t filed for years is the unknown: What if I owe a massive amount?
But the truth may surprise you. Many non-filers discover they didn’t owe anything at all—and some even lost refunds by not filing.
Here’s how liability actually works and how to find out what you really owe.
1. Filing a Return vs. Owing Tax—They’re Not the Same
Whether you owe tax is based on:
- Income
- Withholding
- Deductions
- Credits
- Filing status
Not filing doesn’t make the tax go away, but it also doesn’t automatically mean you owe. Without a filed return, your true tax picture is unknown.
2. Situations Where You Likely Do Owe
You may owe taxes if:
- Your employers withheld too little
- You had multiple W-2 jobs
- You were a 1099 contractor
- You had investment income
- You withdrew from retirement
- You ran a business
- You collected unemployment
But even then, you may qualify for deductions or credits that lower your tax.
3. The Danger of IRS “Substitute for Returns” (SFRs)
If you don’t file, the IRS may file a return for you. These Substitute for Returns:
- Exclude dependents
- Exclude credits
- Deny most deductions
- Use the highest tax rate possible
A properly filed return almost always yields a lower balance.
4. You May Be Owed a Refund
Every year, millions of dollars in refunds go unclaimed because taxpayers never filed. But refunds only last three years. After that, they disappear forever.
5. How to Find Out What You Really Owe
A CPA specializing in back taxes can pull your IRS Wage & Income Transcripts. These show:
- Every W-2
- Every 1099
- Every mortgage or interest statement
- Every retirement distribution
These records allow us to reconstruct all missing years and determine your actual tax liability.
Final Thoughts Guessing leads to fear. Numbers lead to relief. Once you learn what you truly owe, the solution becomes clear—and you can finally move forward with confidence.
