Tips for Filing Back Taxes

Things happen in life that can throw people a bit off track. Maybe, for example, you had a tough year, or there was a period in your life when you weren’t very responsible. Whatever the case may be, if you went through this kind of “phase,” you may have missed filing tax returns for a particular year or years.

When that happens, the IRS can file a return on your behalf and assess what you owe, and it’s often not pretty! Before that happens, however, or even after if you still have time, you can simply file your own back tax returns.  

Get Your Information Together

Depending on how long ago your missed tax year was, it may be hard to locate information for that year. However, do your best to find any relevant W-2s or other documents. The IRS is likely to have these types of important documents on file, and you can call them or go online to request to have them sent to you.

Once you have the documents you need, your next step is to file your back tax return. Remember, you’ll need to go by the tax rules that were in place the year you missed filing! This is easy to do if you use a tax software program or online filing system. Just bear in mind that prior-year returns have to be physically mailed to the IRS. So, while you can fill out the forms online, you’ll need to actually print and mail them.

Get Some Help

Once you file your past return, you’ll know if you’re entitled to a refund or if you’re owed money. If it’s the latter, then prepare for penalties and fines to be assessed for late filing. The IRS will often give you a few different options for paying your tax debt, such as all at once, via a payment plan, or through an offer in compromise. If you’re unsure about the best way to pay your tax debt, don’t hesitate to reach out to a tax professional. They can help you to better understand these options and to choose the one that’s right for you.

Ultimately, filing back taxes can be a pain, but it’s necessary! If you’re tired of living in fear that the IRS is going to come knocking at your door over those unfiled years, take action and get back on track and back in compliance.

What Happens if You Stop Filing Tax Returns

Sometimes, for various reasons, people will simply stop filing their tax returns. They might do this for one year, or they might do it for multiple years in a row. While you should never be tempted to simply stop filing your returns, you may be curious about what happens in this situation. While there is no one exact answer for every person, there is one common course of action that the IRS is likely to take should you fail to file.

A Substitute Return

One thing that may happen when a return is not filed is that the IRS may file what is called a substitute for a tax return. They will fill this form out based on the information they have available on you, whether it is accurate or not. From there, they can use that information to start collection activities against you.

As you can imagine, a substitute return is not in your best interest. The IRS is not going to file for deductions or anything else to cut you any tax breaks. Instead, in most cases, they will charge you the maximum amount possible, which could leave you owning some serious cash.

To avoid having a substitute return filed, always file your own returns on time, preferably with the help of a tax professional.

Your Rights

While it’s best to avoid a substitute return being filed in the first place, you do have options if one is filed and you don’t agree with the amount you owe. You can, for example, choose to go to tax court and attest the IRS’ assessment.

However, this is often a long, complex, and difficult process that you should avoid if you can. If it’s too late for that, contact a tax professional for assistance.

However, when possible, you’re much better off just filing your returns on time, with professional help, to avoid hassles and situations like this one.