Do You Need to File Past Tax Returns?
Uh-oh! April 15th came and went and for whatever reason, you neglected to file your tax return. The situation probably feels pretty scary and if the April 15th that you missed was from several years ago and if you missed filing more than just that one year, you probably feel really overwhelmed. No one wants to deal with the IRS, however, many individuals fail to file their returns on time and may need to file past tax returns for one year or multiple years. Although there are a multitude of reasons as to why an individual does not file a return on time, probably the most common reason is not being able to afford to pay the tax liability.
Actually, filing a late or past tax return may not be as difficult as you fear. The only way you can resolve past tax issues is to actually file the return or returns. Even if you can’t afford to pay the tax liability, you should avoid additional penalties and get the past tax returns filed.
Here is what happens when you do not file a return:
- You will be penalized and end up owing more than your original tax liability
- The IRS will create a tax return for you based only on the information that they have which may not be accurate or reflect expenses that you could have deducted, or claims and credits that you might be eligible for.
- Once the tax liability is assessed, the IRS will begin the collection process in an attempt to collect the tax revenue
So, do you need to file past tax returns? YES! Absolutely, and the sooner you do it the better. You will not avoid your tax liability by not filing a return. You will only end up having to pay more and the longer that it goes unfiled, the larger the amount will be. Once you file your return, the IRS will likely adjust and/or correct their assessment. You will then be able to negotiate with them to settle your tax debt.