Don’t File 10 Years of Tax Returns!
Do you have years and years of unfiled tax returns? Feeling overwhelmed by the thought of catching up? Maybe you think you need to file every single year since you last filed. Want some good news? You may not have to go back as far as you think.
Let’s break down the truth about getting back on track with the IRS without filing a decade’s worth of tax returns.
How Many Years Back Do You Really Need to File?
The IRS typically, generally, usually, requires taxpayers to have filed the last six years of tax returns to considered compliant. FULL DISCLOSURE: If you have more than six years of unfiled returns it doesn’t mean you’re off the hook for the earlier years, but the focus is usually on the most recent six years of compliance.
Why Six Years?
The IRS considers six years as a reasonable timeframe for enforcement. Usually, the IRS won’t go back further unless there’s evidence of fraud or substantial unpaid taxes. By filing the last six years, you can move your account along in several ways and avoid significant legal or financial consequences.
What Happens to the Other Years?
If you owe taxes from older years, the IRS might assess them, but frequently it is ignored as the IRS now considers you in compliance.
***HUGE NOTE: If the IRS owes you money from unfiled tax years, you need to act quickly. Refunds can only be claimed within three years of the original filing deadline. After that, kiss the money goodbye-the IRS keeps it. Check out THIS BLOG!
Benefits of Filing Now
Avoid “Tax Evasion”: Failing to file taxes for multiple years is a crime, usually the IRS criminal investigators focus on folks who are willfully noncompliant. By filing those six years you take yourself out of this group and minimize this risk.
Stop IRS Action: Filing your returns can be one requirement to prevent wage garnishments, levies, or liens on your property.
Peace of Mind: I can’t stress this one enough, filing those old returns and dealing with any taxes owed, is a burden removed like no other.
Steps to Get Back on Track
Gather Your Records: Get your wage and income transcripts from the IRS, so you know what they know. Check out THIS BLOG!
Consult a Professional: An experienced tax professional can guide you through filing past returns, maximizing deductions, and resolving issues. Yes, that would be me.
File the Most Recent Six Years: Focus on these returns to meet IRS compliance requirements. ***See note below***
Deal with any Taxes Owed: If you owe taxes, deal with it right away, while you are still considered complaint.
Pro Tip: Don’t Wait for the IRS to Find You
If the IRS gets tired of waiting they will file a Substitute for Return (SFR) on your behalf. And trust me, they won’t calculate your taxes in your best interest. I’m talking no deductions, no dependents, no credits, just BOOM-pay this! Filing your own returns allows you to claim deductions and credits, often significantly reducing your tax bill.
Pro Tip: Maybe 3 years is Enough?
If you normally receive refunds on your tax returns going back six years may not be needed. For example, if you had significant withholding on your W-2 to generate a refund, and the return is over 3 years past due, the IRS is unlikely to come after you for it, and you won’t receive the refund $$$. At that point there may not be a point to filing older than 3 years. Each case is fact dependent, please consult a tax professional.
Avoid the Panic—Take the Right Steps
The idea of filing 10 or more years of tax returns can feel like a momentous task. But it probably isn’t needed. Start with the last six years and work with a professional to ensure accuracy and compliance.
At Tax Rescue CPA, we specialize in helping individuals who haven’t filed in years get back on track. Whether you owe the IRS or are due a refund, we’ll make the process fast and painless.
“Who’s Doing Your Taxes?” – Tax Rescue CPA
