How DO I File Back Tax Returns To The IRS?
Step 1: Collect all of your Tax Preparation documents
In order to prepare your back tax returns accurately, you will need all of your W2’s, 1098’s, 1099’s, etc., for each unfiled tax year. If you have business income and expenses, you’ll need to round up all of your receipts in order to take advantage of each and every deduction you’re eligible for, to offset your taxable income.
Step 2: Get your IRS Tax Records
If you don’t have all of your tax preparation documents, you can call the IRS to request your transcripts by phone. Also, you can request your missing transcripts by mail, and even online.
Call the IRS to order your IRS transcripts by phone, and follow the prompts in the recorded message.
Businesses, Partnerships and Individuals who need transcript information from other forms or need a tax account transcript must use the Form 4506T, Request for Transcript of Tax Return.
Please note that, if you order online or by phone, you should receive your transcript within 5 to 10 days from the time the IRS receives your request. Allow 30 calendar days for delivery of a transcript if you order by mail using Form 4506-T or Form 4506T-EZ. It can take the IRS up to 45 days to process your request.
Step 3: Get previous year(s) IRS tax forms
According to the IRS, all prior year tax returns must be prepared on tax forms created for each specific tax year. If you do not have original tax forms for each tax year, you can always contact the IRS and request them, or download the form(s) from irs.gov to receive them a lot faster.
Step 4: Prepare your back tax returns
If you’re familiar with each tax law, for each year of unfiled tax return(s), you should be comfortable preparing your taxes yourself at this point.
If you intend on using a tax software to prepare your returns, keep in mind that you are responsible for what’s inputted, not the software. Since tax laws are modified and adjusted each year, relying on instructions from a software, may not be in your best interest. You may have to prepare your tax returns all over again, or worse, get audited.
Once you’ve completed your tax returns, be sure to review each year for tax law accuracy, as well as any missing information.
Step 5: File your Tax Returns
Submit the forms to the IRS at the address listed in the Form 1040 instructions.
If you owe additional income tax for any of the prior years, remember to include as large of a payment as you can to reduce your interest charges.
Unlike tax penalties which stop accruing when the maximum is reached, monthly interest still accrues indefinitely until the tax is paid.
Once the IRS receives your tax returns, you should expect to receive notice of the exact penalty and interest charges you are responsible for.
Why You Should File Your Past Due Return Now
Avoid interest and penalties
File your past due return and pay now to limit interest charges and late payment penalties.
Claim a Refund
You risk losing your refund if you don't file your return. If you are due a refund for withholding or estimated taxes, you must file your return to claim it within 3 years of the return due date. The same rule applies to a right to claim tax credits such as the Earned Income Credit.
The IRS will hold income tax refunds in cases where their records show that one or more income tax returns are past due. And, the IRS will hold them until they get the past due return or receive an acceptable reason for not filing a past due return.
Protect Social Security Benefits
If you are self-employed and do not file your federal income tax return, any self-employment income you earned will not be reported to the Social Security Administration and you will not receive credits toward Social Security retirement or disability benefits.
Avoid Issues Obtaining Loans
Loan approvals may be delayed if you don't file your return. Copies of filed tax returns must be submitted to financial institutions, mortgage lenders/brokers, etc., whenever you want to buy or refinance a home, get a loan for a business, or apply for federal aid for higher education.
If You Owe More Than You Can Pay
If you cannot pay what you owe, you should call the IRS and request an additional 60-120 days to pay your account in full. If you need more than 120 days to pay, you can request a payment plan. And, if you are unable to reach an affordable payment plan agreement with the IRS, you may be eligible for an Offer in Compromise.
What If You Don’t File Voluntarily
Substitute Return
If you fail to file, the IRS may file a substitute return for you, also known as an SFR. This return might not give you credit for deductions and exemptions you may be entitled to receive. The IRS will send you a Notice of Deficiency CP3219N (90-day letter) proposing a tax assessment. You will have 90 days to file your past due tax return or file a petition in Tax Court. If you do neither, the IRS will proceed with their proposed assessment. If you have received notice CP3219N you cannot request an extension to file.
If any of the income listed is incorrect, you may do the following:
Contact the IRS to let them know.
Contact the payer (source) of the income to request a corrected Form W-2 or 1099.
Attach the corrected forms when you send your completed tax returns to the IRS.
If the IRS files a substitute return (SFR), it is still in your best interest to file your own tax return to take advantage of any exemptions, credits and deductions you are entitled to receive. The IRS will generally adjust your account to reflect the correct figures.
Collection and Enforcement Actions
The return the IRS prepares for you (their proposed assessment) will lead to a tax bill, which, if unpaid, will trigger the collection process. This can include such actions as an IRS Levy to enforce a wage garnishment, or levy your bank account, or even the filing of an IRS Lien.
If you repeatedly do not file, you could be subject to additional enforcement measures, such as additional penalties, an IRS Seizure and/or criminal prosecution.
Already Filed Your Past Due Return
If you received a notice, you should send the IRS a copy of the past due return to the indicated address.
It takes approximately 6 weeks or more, for the IRS to process an accurately completed past due tax return.
If you have unfiled tax returns and need to be sure you understand your options, click the green button below and schedule your free Tax Strategy Analysis Today!