Filing Past Due Tax Returns

Filing Past Due Tax Returns: A Helpful Guide

Have you fallen behind on filing your tax returns? Don’t worry – you can get caught up. This article will walk you through everything you need to know about filing past due tax returns.

Why You Should File Past Due Returns

Even if you can’t pay your full tax liability, you should still file all tax returns that are due. Here are some key reasons:

• If you are owed a refund, you must file to claim it. The IRS will only issue refunds for returns filed within 3 years of the due date.
• Filing now can limit interest and late payment penalties that accrue.
• If you are self-employed, unfiled returns mean your income isn’t reported for Social Security credits.
• Past returns may be required for loans, mortgages, federal student aid, etc. Not having them can cause delays.

How Many Years of Past Returns Should You File?

The IRS generally requires returns for the past 6 years to bring you into compliance. However, in some cases they may require even older returns depending on the circumstances. Call the IRS Practitioner Priority Service line to confirm exactly which years you need to file[1].

Gather Your Documents

To prepare accurate past due returns, you’ll need tax documents from each year such as:

• W-2s
• 1099s
• Records of income and deductions

If you don’t have these, you can request transcripts from the IRS for the information. Use Get Transcript or Form 4506-T[2].

Use the Proper Forms

Don’t use the current year’s forms for past due returns. Tax rules change each year, so get old forms and instructions from the IRS website [3].

Consider Payment Options if You Owe

If you owe taxes, look into payment plans, penalty relief, and other options. The IRS offers:

• Installment agreements – pay over time in monthly payments[4]
• Offers in compromise – settle for less than the full amount[5]
• Penalty abatement – request removal of penalties[6]

Payment plans allow you to file on time and pay later. Penalty relief may reduce the failure-to-file and failure-to-pay penalties.

The IRS May Have Filed for You

If you didn’t file, the IRS may have filed a substitute return for you after 3 years. You’ll need to file your own return to replace this. Expect extra processing time and scrutiny.

Request Help If Needed

Don’t be afraid to get help from a tax pro, software or the IRS. The IRS offers free tax prep for those who qualify. Tax pros can help maximize deductions and credits.

Special Processing for Some Returns

If you’ve gotten notices from the IRS about past due returns, they may require special processing that takes longer. Be patient as the IRS works through its backlog.

You Can’t Claim Old Refunds

Unfortunately, the IRS does not issue refunds for returns filed more than 3 years late. You also can’t offset old refunds against balances due.

Penalties Can Be Steep

Returns with tax due will have failure-to-file (up to 25%) and failure-to-pay penalties (up to 25%). Combined, penalties can reach 47.5% of unpaid tax. Request relief if possible.

Take Action Now

Don’t delay – file past due returns as soon as possible to take advantage of refunds, tax credits, payment plans, and penalty relief options. Visit the IRS website for help getting started[1].

Sources:

1. IRS: Filing Past Due Tax Returns
2. IRS: About Form 4506-T
3. IRS: Prior Year Forms and Instructions
4. IRS: Payment Plans
5. IRS: Offers in Compromise
6. IRS: Penalty Relief
7. IRS: Substitute for Return Program
8. IRS: Free File
9. IRS: Operations During COVID-19
10. IRS: Refund Rules
11. IRS: Penalties