What to Do If You Haven’t Filed Past Tax Returns
Filing taxes can be difficult and stressful. Still, it’s something that every American has to do every year.
Miss the filing deadline and the IRS might come after you and you might have to pay large penalties.
If you haven’t filed your taxes for past years, you should do so as quickly as possible.
The IRS is largely concerned with getting the money it’s owed, so it does what it can to help people who file late, even if they are years behind schedule.
Find out what you need to do if you haven’t filed tax returns for past years.
It’s Never Too Late to File Past Returns
The number one thing to remember is that if it is never too late to file a tax return for a past year.
If you realized today that you forgot to file your tax return 10 years ago, you can still file your taxes for that year.
It’s important to rectify the problem as quickly as possible.
The longer you wait, the worse the penalties will get, and the more likely you are to find the IRS coming after you for not filing your taxes.
Get Your Tax Documents Ready
If you’re filing taxes for a tax year that ended a long time ago, you might have trouble getting all of the paperwork together.
While you should keep tax-related documents on-file for as long as possible, it’s easy for those W-2s and 1099s to get lost in a move or the general business of life.
The good news is that the IRS already has copies of many of these documents and is happy to provide them to you.
Contact the IRS by filling out Form 4506-T, Request for Transcript of Tax Return. Using the form, you can ask that the IRS send you W-2s, 1099s, and 1098s for the relevant tax year.
The IRS can take up to 45 days to process this request, so do this as soon as you can.
Once you get the forms, you’ll have much of the information that you’ll need to file your taxes.
If you want to get complicated and do something like itemize your deductions, that will require more work.
You’ll need to get receipts and other records that can help you prove the legitimacy of the deductions you want to claim.
Make Sure to Use the Right Forms
You can find tax forms on the IRS website very easily with a simple internet search.
However, the IRS website generally links to the form for the current tax year.
Because the U.S. tax code is always changing, these forms are changed each year. You have to make sure that you use the forms from the tax year you’re filing for, rather than the current year.
The IRS website provides downloads of the tax forms used in previous years.
Make sure you download the proper ones and use them when filing.
Also, make sure to follow the tax rules for the tax-year you’re filing for.
Tax rules change over the years and some deductions you currently claim might not have existed back then.
Tax Filing Software Can Help, But You Have to Mail the Forms
One of the easiest ways to file your taxes for past years is to use a tax-preparation software.
Most major tax preparation programs, like TurboTax, will help you with this.
The software will ask you simple questions and use your answers to automatically fill out the correct forms.
Once you’ve filled out the forms, you’ll have to print them out and mail them to the IRS.
Generally, the IRS accepts e-filing only for the current year’s taxes.
Any tax returns that are being sent in for previous tax years must be mailed physically.
Set Up a Payment Plan
If you owe a lot of money on your taxes from past years, you might want to consider setting up a payment plan.
The IRS is happy to work with people who are making a good faith effort to pay their tax bill and often offers payment plans to taxpayers.
You can apply for a payment plan online, so long as you meet the requirements. There are short-term payment plans and long-term payment plans available.
- To set up a short-term payment plan, you must owe no more than $100,000 in tax, penalties, and interest. These plans require that you pay the full amount in no more than 120 days.
- To set up a long-term plan, you must owe $50,000 or less in tax, penalties, and interest. You can take more than 120 days to pay off your bill with a long-term plan.
You’ll also need to provide the following information to set up a plan:
- Name exactly as it appears on your most recently filed tax return
- Valid e-mail address
- Address from your most recently filed tax return
- Date of birth
- Filing status
- Your Social Security Number (and spouse's if filed jointly) or
- Individual Tax ID Number (ITIN)
If you previously registered for an Online Payment Agreement, Get Transcript, or an Identity Protection PIN (IP PIN), you should log in with the same user ID and password.
Applying for a payment plan can cost as much as $149 for long-term plans.
The fees are lower if you set up automatic withdrawals from your checking account, so choose that option if you can.
Penalties You Might Face for Filing Late
If you do file your taxes late, be aware that you will owe a penalty.
There are separate penalties for filing late and for making your payment late.
- The penalty for filing your tax return late is 5% of the amount due for every month that the return is late. This penalty will not exceed 25% of your unpaid taxes.
- The penalty for late payment is lower, at 0.5% of unpaid taxes per month that the payment is late. This penalty will also max out at 25%.
- If you owe penalties for both late filing and late payment, the total penalty charged won’t exceed 5% per month that you file late.
On top of the penalties, you’ll owe interest on any amount that is still due.
The rate is variable and set every three months. Interest is also charged on the penalties that accrue, which could leave you with a significant bill if you don’t file in a timely manner.
Because of the huge penalties that can accrue, you should do everything you can to handle your taxes as quickly as possible.
Even if you aren’t able to pay your taxes, try your best to file on time. This can help reduce the penalties you’ll pay. You might also interest on any balance due.
If you expect that you might have trouble filing on time, make sure to file for an extension. This can give you some extra time and help reduce the penalties you’ll owe.
If you are considering an IRS payment plan to pay back owed taxes, it is generally less costly to use other financial options, such as personal loans. Even the IRS recommends using these alternatives.
File Soon Or You Could Lose Your Refund
If you are owed a refund for a tax year in which you did not file taxes, there’s good news and bad news for you.
The good news is that if the IRS owes you a refund, you won’t be penalized for late filing or late payment. This is because you’ve paid the IRS everything you owe and the penalties are usually based on the amount you owe.
The bad news is that there is a statute of limitations on your refund.
Statue of limitations on tax refunds
If you take more than three years from the original due date to file your return, you will be unable to claim your tax refund.
So, if you failed to file your 2020 taxes, which were due on April 15th, 2021, you have until April 15th, 2023 to file your 2020 return and receive a refund.
If you file your return after that date, the IRS won’t be able to send you your refund.
What that means is that you should file for more recent years as soon as possible to preserve your chances of getting money back from the IRS.
Filing for recently missed years will also let you avoid some penalties, as you’ve likely already reached the maximum penalties for years that are further in the past.
Use a Tax Pro
Taxes are confusing and stressful, especially if you’re filing late.
Don’t be afraid to consult a tax professional for help if you’re filing your taxes late.
Much of the time, you can save more on your taxes than you pay for the tax professional’s services, making the service pay for itself.
Filing past tax returns take some effort, but it’s important to do.
Filing as soon as you can after realizing that you’ve missed a year can help you avoid significant penalties.
If you can’t pay the bill right away, work with the IRS to set up a payment plan that you can handle.