How To File Unfiled (Back) Tax Returns?

Filing unfiled tax returns, even if they are years late, stops the IRS from increasing your penalties, preserves your right to claim refunds and credits, and prevents the agency from filing a return on your behalf that gives you none of the deductions or credits you may be entitled to. According to the IRS, the failure-to-file penalty is 5 percent of the unpaid tax for each month or part of a month that a return is late, up to a maximum of 25 percent. This penalty is separate from and more expensive than the failure-to-pay penalty, which is 0.5 percent per month. Filing, even when you cannot pay the balance, stops the larger penalty from growing.

Beyond penalties, unfiled returns create problems that extend into other areas of your financial life. According to the IRS, the agency holds income tax refunds when its records show that one or more returns are past due. Self-employed individuals who do not file will not have their earnings reported to the Social Security Administration, which means lost credits toward retirement and disability benefits. Mortgage lenders, business loan providers, and federal financial aid programs all require copies of filed tax returns as part of the approval process.

How Many Years Of Back Taxes Do You Need To File

The IRS generally requires you to file the last six years of unfiled tax returns to be considered in compliance, though the agency prefers that you file all outstanding returns. According to the IRS, there is no statute of limitations on filing a past-due return, meaning you can file a return for any prior year regardless of how long ago it was due. However, the IRS only allows you to claim a refund within three years of the return's original due date. After that three-year window closes, any refund you would have been owed is forfeited permanently.

If you have multiple years of unfiled returns, the IRS typically asks you to start with the oldest unfiled year and work forward. Filing all six years brings your account into good standing and is usually required before the IRS will approve a payment plan or other resolution for any balance you owe. For a full overview of the resolution options available once you have filed, our guide to handling a tax balance you cannot pay covers installment agreements, Offers in Compromise, and hardship status.

How To Reconstruct Tax Records For Past Years

If you no longer have the W-2s, 1099s, or other income documents you need to prepare a past-due return, the IRS can provide transcripts of the income information it has on file for you. According to the IRS, you can request wage and income transcripts by filing Form 4506-T, Request for Transcript of Tax Return. These transcripts cover the last 10 tax years and include the information reported to the IRS by your employers, banks, and other payers.

Wage and income transcripts show the data from forms such as W-2s, 1099s, and 1098s, but they do not include information about deductions or credits you may qualify for. To fill in those gaps, gather any records you still have, including bank and brokerage statements, mortgage interest statements, property tax records, charitable donation receipts, and documentation of business expenses if you were self-employed. If you cannot locate certain records, your bank or financial institution may be able to provide duplicate statements for prior years.

Step By Step Guide To Filing Back Tax Returns

Filing a back tax return follows the same general process as filing a current-year return, with a few important differences in the forms and filing method you use. Follow these steps to file each unfiled return.

1. Request your transcripts. File Form 4506-T with the IRS to get wage and income transcripts for each unfiled year. You can request transcripts online through your IRS Online Account, by mail, or by calling 800-829-1040.
2. Gather your records. Collect all available income documents, deduction and credit documentation, and any IRS notices you have received for each unfiled year.
3. Use the correct year's tax forms. According to the IRS, you must file each return using the tax forms and instructions for the specific year the return covers. A 2021 return must be filed on 2021 forms, a 2022 return on 2022 forms, and so on. Prior-year forms are available on the IRS website under "Prior Year Products."
4. Complete the return carefully. Cross-reference the information on your transcript with the documents you gathered to make sure all income is reported and all eligible deductions and credits are claimed. Review each return against the transcript before filing.
5. Mail the return. According to the IRS, prior-year returns generally cannot be e-filed and must be mailed to the address listed in the instructions for that year's Form 1040. Use certified mail or a trackable delivery service so you have proof of filing.
6. Pay what you can. If the return shows a balance due, include a payment for as much as you can afford. Even a partial payment reduces the balance on which penalties and interest accrue.

According to the IRS, it takes approximately six weeks to process an accurately completed past-due return. If you received a notice about unfiled returns, send the completed return to the address indicated on the notice rather than the standard filing address.

What Happens If The IRS Files A Return For You

If you do not file voluntarily, the IRS can file a substitute return on your behalf, and this substitute return will not include deductions, credits, or exemptions you may be entitled to claim. According to the IRS, a substitute return is based solely on the income information the agency received from third parties such as employers and banks. Because it does not account for deductions like business expenses, itemized deductions, or tax credits such as the Earned Income Credit, the substitute return almost always results in a higher tax bill than the return you would have filed yourself.

After preparing a substitute return, the IRS sends a CP3219N, which is a Notice of Deficiency (also called a 90-day letter) proposing the tax assessment. You have 90 days to either file your own return or petition the U.S. Tax Court. Taxpayers who want to understand the CP3219A Notice of Deficiency in detail, including the 90-day deadline and Tax Court options, can review our full guide to the statutory notice of deficiency. If you do neither, the IRS proceeds with the assessment, and the balance enters the standard collection process.

How To Handle The Balance After Filing

Filing back tax returns often results in a balance due, and the IRS expects you to address that balance even if you cannot pay it in full. According to the IRS, you have several options for resolving the amount owed.

• Pay in full. The fastest way to stop penalties and interest from accruing further.
• Short-term payment extension. According to the IRS, you can request an additional 60 to 120 days to pay your balance in full through the IRS Online Payment Agreement tool or by calling 800-829-1040, with no setup fee.
• Installment agreement. A monthly payment plan that spreads the balance over time. Our step-by-step guide to installment agreements explains the application process and balance thresholds.
• Offer in Compromise. If the full balance is unlikely to be collected, you may be able to settle for less than you owe.
• Currently Not Collectible status. If you cannot afford to pay anything, the IRS may temporarily pause collection.

Taxpayers who are filing multiple years of back returns and facing a combined balance may also qualify for the IRS Fresh Start program, which expands eligibility for installment agreements and eases lien thresholds for individuals and businesses working to get back into compliance.

Frequently Asked Questions About Filing Back Taxes

How Far Back Can You File Taxes?

You can file a tax return for any prior year with no time limit on how far back you go. According to the IRS, there is no statute of limitations on filing a past-due return. However, refund claims must be filed within three years of the return's original due date, and the IRS generally requires the last six years of returns to consider you in compliance.

Can You File Back Taxes Online?

Most prior-year returns cannot be e-filed and must be printed and mailed to the IRS. According to the IRS, e-filing is generally only available for the current tax year and the two most recent prior years. Returns for earlier years must be completed on the appropriate year's forms and mailed to the address in the instructions.

What Happens If You Have Not Filed Taxes In Several Years?

The IRS tracks unfiled returns and can take enforcement action including filing a substitute return, assessing penalties, holding your refunds, and eventually pursuing levies and liens. According to the IRS, the best course of action is to file all outstanding returns as soon as possible, pay what you can, and contact the IRS to discuss resolution options for any remaining balance.

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