I'm actually a former IRS revenue officer, and I need to correct some misconceptions here. First, the IRS doesn't typically "come after" people in the dramatic way many fear. There's a process: 1. They'll first send notices about unfiled returns 2. They may create Substitute for Returns (SFRs) based on income reported to them (which often results in higher tax bills) 3. They'll send notices of assessment and demand for payment 4. Only after multiple notices and opportunities to resolve would they move to collection actions For a case this complex with self-employment and cryptocurrency, your husband absolutely needs a tax attorney who specializes in back taxes and potentially an accountant who understands crypto taxation. These should be separate professionals with different specialties. The good news: the IRS has numerous programs for taxpayers with significant back taxes, including Installment Agreements, Offers in Compromise, and Currently Not Collectible status. Criminal prosecution is rare and typically reserved for cases involving active fraud, not just non-filing.

As someone who went through a similar discovery with my ex-husband (though thankfully not as large), I want to emphasize that your feelings of panic are completely valid, but this situation is manageable with the right approach. The key thing to understand is that the IRS has likely already started creating substitute returns for your husband based on the income reported to them via W-2s and 1099s. These substitute returns assume no deductions and often result in much higher tax bills than what he would actually owe if he filed proper returns. This means time is genuinely of the essence. I'd strongly recommend taking these steps immediately: 1. Get a power of attorney prepared so you can speak with the IRS on his behalf if needed (your husband's casual attitude suggests he might not prioritize this) 2. Start gathering ALL financial records - bank statements, investment accounts, crypto exchange records, business expenses, everything 3. File for an extension on 2023 taxes to buy some time while you get professional help The innocent spouse relief others mentioned is real, but it has strict requirements and deadlines. Don't wait to explore this option. Also, consider that your husband's nonchalant attitude might indicate this problem is even larger than he's admitting to you. You're right to be concerned about asset seizure, but the IRS typically works with taxpayers who are making good faith efforts to resolve their situations. The key is starting that process NOW, not after your move.

Just want to add one more tip that helped us with a similar income disparity. If you're trying to avoid a huge tax bill but don't want to significantly reduce your monthly take-home pay, consider adjusting your W-4 withholding for just your bonus amounts. My husband and I have about a $55k income difference. Instead of having more withheld from every paycheck, we set our regular withholding correctly using the IRS calculator, but then elected for maximum withholding (22%) on all bonuses. Since you mentioned getting around $30k combined in bonuses, having the maximum withheld from those would cover a significant portion of your underwithholding without affecting your regular paychecks.

One more thing nobody has mentioned - if u already know ur gonna owe for 2024 and dont want to change ur withholding too dramatically, u can make quarterly estimated tax payments directly to the IRS. This way your paychecks stay about the same but you avoid a big bill (and possibly penalties) at tax time. For us, we decided to have a little extra taken out of each paycheck (about half of what was recommended) and then we make quarterly payments for the rest. Feels less painful to spread it out this way. The payment vouchers are on form 1040-ES and due dates are typically April 15, June 15, Sept 15, and Jan 15 of the following year.

One thing to consider - the IRS has been putting extra scrutiny on ERC claims lately, especially larger ones. The "issue" they mentioned might not even be related to the owners' tax debts, but could be part of their general enhanced review process. Some specific things they're looking at closely: - Whether the business actually had the required reduction in gross receipts - If government orders truly affected your operations - Whether the qualified wages were calculated correctly - If any owners/partners were improperly included in the wage calculations It might be worth preemptively addressing these points if you haven't already, rather than assuming it's about the personal tax debts.

I went through a very similar situation last year with our partnership's ERC claim. We had a $900K claim stuck for 10+ months, and one of our partners owed about $400K in personal taxes. The IRS initially flagged our claim for what they called a "nominee review" - essentially checking if the business was being used to avoid personal tax collection. What ultimately resolved it was providing detailed documentation showing: 1. The partnership operated as a legitimate separate business entity 2. All payroll and business expenses were paid from business accounts 3. The partner with tax debt had no check-signing authority on business accounts 4. We maintained proper corporate formalities (partnership meetings, separate books, etc.) We also had to submit a formal statement explaining that the ERC was earned by the business entity through legitimate qualified wages paid to employees, completely separate from any partner's personal tax situation. The whole process took about 4 additional months after we submitted the extra documentation, but we did eventually receive the full credit. The key was demonstrating clear separation between the business operations that earned the ERC and the partner's personal tax issues. I'd recommend getting ahead of this by proactively submitting documentation that proves your business operates independently, rather than waiting for them to request it.

I switched from simplified to regular method this year and found out you can actually deduct a portion of home repairs that benefit the entire house! I had my central AC replaced for $7,500 and got to deduct 18% of that cost (my office percentage). But be careful - if the repair only benefits personal spaces, you can't deduct any of it. Also, don't forget about these expenses for the regular method: - Property insurance - Security system - Cleaning services - HOA fees - Home maintenance

You're absolutely right about the math! In high-rent areas like yours, the simplified method rarely makes sense. I'm in a similar boat - paying $3,200/month rent in Seattle with 25% business use, so I'm looking at around $9,600 in rent deductions alone with the actual expense method. The main reason people choose simplified isn't because it's better financially, but because they're intimidated by the recordkeeping. You need to track and document every home-related expense throughout the year - utilities, insurance, repairs, etc. Plus you have to maintain floor plans and usage logs in case of an audit. But honestly, once you set up a simple spreadsheet or use accounting software, it's not that complicated. And the extra deductions are usually worth thousands more than the $1,500 cap. Just make sure you're using the space exclusively for business - that's the biggest audit trigger the IRS looks for.

Anyone know if a $0 conversion affects the 5-year rule for Roth IRA withdrawals? Like if I convert my empty Traditional IRA to Roth now, then make actual contributions in a few months, does the 5-year clock start now or when I make my first contribution?

Just to add another perspective here - I went through this exact situation last year and wanted to share what I learned. Even though you're converting $0, make sure to keep really good records of the conversion date and any paperwork from your custodian. The IRS likes to see a clear paper trail, especially for retirement account transactions. I'd recommend taking screenshots of your account before and after the conversion showing the $0 balance, and saving any confirmation emails or letters from your bank/brokerage. This documentation becomes super helpful if you ever need to prove the conversion happened and when it occurred. Also, double-check with your custodian about any fees for the conversion process itself. Some institutions charge administrative fees even for $0 balance conversions, which could actually result in a negative balance that you'd need to cover. Better to know upfront than get surprised later!