If you’re self-employed and haven’t filed taxes for one or more years, you’re not alone—especially in North Carolina. Life gets busy, and before you know it, a year (or more) has passed without filing your returns. But failing to file can lead to IRS penalties, North Carolina Department of Revenue (NCDOR) enforcement, and even the loss of business opportunities.
The good news? There are clear steps you can take to get caught up, protect your business, and avoid making things worse.
Step 1: Get Your Income Records Together
When you’re self-employed, you may not have W-2s—but you do have income to report. Even if you didn’t receive 1099s, you’re still required to report all gross income earned.
Start gathering:
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1099-NEC or 1099-K forms (if issued)
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Bank statements
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PayPal, Stripe, or other payment processor reports
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Records of cash payments or checks received
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Invoices sent to clients
If you can’t find all your records, a tax professional can help you reconstruct income based on deposits and business activity.
Step 2: Collect Your Business Expense Records
The IRS and NCDOR tax you on net income—not gross. You may be able to reduce your tax bill by deducting:
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Home office expenses
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Vehicle mileage or expenses
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Internet, phone, and utilities
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Equipment and software
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Contractor payments
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Travel and meals
If your records are messy, don’t panic. We regularly help clients reconstruct expenses using statements, receipts, and reasonable estimates supported by documentation.
Step 3: Determine How Many Years to File
The IRS generally requires at least six years of back filings to consider you compliant. However, depending on your situation:
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If you’ve received IRS or NCDOR notices, you may only need to file the years they’re requesting.
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If you’re applying for a mortgage, loan, or professional license, more years may be needed.
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If your income was below the filing threshold in certain years, you may not need to file those years at all.
Step 4: Watch for Substitute for Return (SFR) Assessments
If you didn’t file, the IRS or NCDOR may have filed a Substitute for Return (SFR) on your behalf—usually without any business deductions.
This inflates your tax bill and can trigger liens or levies. You can replace an SFR with an accurate return to potentially reduce your balance significantly.
Step 5: File Federal and State Returns Together
Don’t forget—self-employed individuals in North Carolina must file with both:
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IRS – using Schedule C attached to Form 1040
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NCDOR – using Form D-400 for NC state income taxes
And if you’ve made over $20,000 in net income, you may also owe self-employment taxes, which include Social Security and Medicare contributions.
Step 6: Request a Payment Plan (If You Owe)
If you owe more than you can pay:
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IRS: You can request an installment agreement or apply for an Offer in Compromise.
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NCDOR: Offers structured payment plans, usually with a required down payment and strict deadlines.
Don’t ignore the balance—penalties and interest grow quickly. Being proactive helps you avoid garnishments or liens.
Step 7: Fix Your Estimated Taxes Going Forward
One of the most common reasons self-employed individuals fall behind is not making quarterly estimated tax payments.
We’ll help you:
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Set up a quarterly payment system
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Estimate what you should pay based on projected income
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Stay current so you never fall behind again
Step 8: Work with a Tax Professional Who Understands Self-Employment
At Polaris Tax & Accounting, we regularly help freelancers, gig workers, LLC owners, and 1099 contractors file years of back taxes and get back on track.
We don’t judge. We fix.
Ready to File Back Taxes in NC? Let’s Do It Right
📞 Call Polaris Tax & Accounting at 704-947-3178
🧾 We represent self-employed clients statewide across North Carolina
🛡️ Licensed Enrolled Agents (EAs) experienced with both IRS and NCDOR cases
📍 100% remote – no office visit required