Questions about Income Tax (dependent claiming/not filing in the past)

Alright, so I don't know if you guys have been keeping up with me throughout these past few months, but things are starting to come along nicely for me. In recap, I've looked into a house and I've looked into seeds, now I need my grow room! More on that in another thread. However, for the set-up that I am considering, I will be needing a considerable amount of cash to get this beast set up. I was looking at saving and maybe having enough in about 2 months to afford a decent room for around $1500; however, as fate would have it, lady luck has shined down upon me.

After getting my W-2, I did some minute research on the interweb and saw some craziness about how much money I have missed out on in the past.

More back story:

As it turns out, me and my wife have not filed our tax returns for the past uh, 4 years; a piece.
In 2008, we had a little boy. We did not file last year, and there for, we did not claim him.
We had a little girl last year as well, so we will be claiming them both this year. We also did not file in 2006 and 2007.

Even more backstory:
I claimed 2 dependents (besides myself) for 2 years in 2006 and 2007. In 2006, I went to H&R block, thinking I would get a return, and instead, they was like, you owe $412. I was like "ok, peace!" and I was out. I never came back and i never paid. 2007 came and went and I did not bother to change my W2 to reflect my true household. I figured I had to at least owe like $700, on top of the fact that I didn't change shit on my W2 in '07, so I owed $412, again. I decided things had to change.

In '08, January, I had my son. I had my wife claim him on her W2, and I began to claim 0 on my checks. I lost out on money, but figured that I was secretly righting the wrong, without having to pay all at once. I just didn't want to face the IRS. Call me a coward, whatever, i knew nothing about taxes, so sue me.
I still did not file.

'09 came, and I should have filed since I had my son, and not realizing the money I would have had, I didn't. I figured it would take at least one more year to right my wrong, so I waited. We had my daughter in November (last nov).

Let it be known that the only reason why my wife hasn't filed is because she was lazy and didn't know how to do it.

Also let it be known that me and my "wife" are not legally married, though we have been together for 6 years (might as well be, mirite?)

Now it is '10 and my friends are telling me that we are owed like $15,000 in back taxes.
Supposedly like $9000 together from this year, a lone, like $4000 together from last year, then $2000 from my wife in 06 and 07

Also, I make aroun $18000 a year and my wife makes around $12000 (lots of unclaimed tips lol) It turns out that me and my girlly was retarded in JUST the right way to build the perfect nest egg for the perfect occasion

Is there any truth to this? Can anyone give me any more info as to whether or not this is true? What is the best way to go about this, to get the most cash that I can? This return is going to buy me the grow that I'll be using for years to come. Thanks in advance for info, +rep to anyone that has serious amounts of Tax Return advice

Without seeing the actual income numbers and what deductions you were eligible for compared to what you actually had held out it's impossible to say what you owe. Since you haven't filed for several years you are going to get hit with penalties and interest on whatever you owe, but if you're income was what you say it was I doubt it's going to be 15 grand. Either way, this is not something you can just let slide and ignore. You can be put into prison for failure to file your taxes if they decide to charge you with income tax evasion, and considering how desperate they are for revenue you can't count on slipping through the cracks any more. Even if you don't go to jail they can garnish your wages, so getting out of paying them once they catch on isn't much of an option. Before you ask, I'm an accountant, so I'm quite familiar with how the tax laws work and what the penalties are for breaking them. Not trying to be a pain, but I've had enough dealings with the IRS to know what bad news they can be.

Now, if you get your personal taxes straightened out and get yourself set up as a business before you go out and start buying equipment you'll be in a position to use all those equipment expenses as write offs for tax purposes. Doesn't do you much good now, but it's something to think about down the road.

I think he meant that HE is owed money. I'm no expert on this stuff, but it wouldn't surprise me if you got a bunch of money back - the child credits and the earned income credit add up.

When I used to do my own taxes I wound up owing money. Then I went with a good accountant, and it turned out I was supposed to be getting money back... not a huge amount, but it's better than paying.

yeah i should say that the credits do add up i bought a house last year so i get a nice chunk from that plus i have 4 kids...I have always filed my taxes so i cant tell you about that but i can tell you that when you go to file you will find out what u owe...You will receive the difference between what you where getting back this year and what you owe the GOV...My chick claiming to kids and herself is getting back $8500 with my house credit and claiming 2 kids im gettin $10500 all i can say is this years cycles are going to be sick...Damn near 20G's no fuckin lie...

Leoth,

He may be owed, or maybe not. Some of his comments seem to indicate that he was over withholding on his pay check deductions,so even with the tax credits he may not come out ahead. That's why I said I would have to see the numbers. If he does end up owing for any of the years he's going to have to pay penalties and interest, and I think there is a late filing charge as well. I seriously doubt he'll end up owing 15 thousand like his friends said, but if he already owed $4k according to H&R block and didn't file or change his witholding since it wouldn't surprise me if he'll still end up owing at least something. Either way, better to bite the bullet and deal with it now, because every year you wait the penalties and interest charges will just get worse. From what was said about income you may be able to talk them down on the amount they make you pay anyway, because even the IRS realizes you can't get blood from a turnip.

The last few years there have been stimulus payments issued against tax returns and there are credits of some sort for having kids. There is no guarentee, but if you don't make a lot of money it won't cost you a lot in taxes. Most of my life I would get most of what I paid in taxes back by filing a return, you just have to read what you are filling out.

If it took a long time to file those back taxes I'm not sure if those "special credits" can still be applied or if they expire. Best to ask a CPA or bookkeeper.