Overwhelmed With Prior Year Unfiled Tax Returns?
While most Americans finish or have finished their current year taxes, others have stacks of unfiled tax returns from previous years. You may feel swamped with the pressures of work and within a blink of an eye, you wake up to find an IRS notice in the mailbox. Let’s face it, life gets busy.
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Nevertheless, you have forgotten about those prior year tax returns, but the IRS hasn’t. Here are some common questions for those taxpayers who are stuck in the mud with unfiled tax returns:
Should I file my Unfiled tax returns?
Since the IRS has 10 years to request an unfiled tax return, we advise that you file it promptly! With that thought in mind, here’s what could happen:
Refund: You might receive a refund from the IRS for a prior year.
You have three years to claim your refund.
Tax Liability: You might have a tax due. Consequently, the following could apply to you.
Failure-to-File Penalty: After the filing deadline, there is a 5% penalty applied to your unpaid tax liability each month it is not paid.
IRS Letter: If you receive a CP3219N letter from the IRS, basically it is a 90-day notice. Hence, you have 90 days to file your return. Supposing that the IRS does not receive your return, they will prepare it. Keep in mind, the IRS will give you the standard deduction and not apply any credits which could lead to a higher tax.
Worst Case Scenario: As the IRS nears the ten year limit an unfiled tax return makes it more likely that the IRS will take a closer look at your entire tax situation.
Failure to File Penalty
The penalty is difficult to dispute because it is computed on IRS forms. You may like to review the IRS failure to pay facts page.
Responding to an IRS letter
If you receive a 90-day notice from the IRS, you have 90 days to file your return and you probably should use our website to complete your prior year tax return. In the case that you do not file your tax return within 90 days, the IRS might send you a bill in the mail.
If you disagree with the bill’s tax liability you have the option to dispute it. Either you can speak with the IRS directly or file the return. The IRS could possibly accept that the bill is inaccurate and revise it. Sometimes your financial situation prevents you from paying your tax liability immediately. Depending on the amount due you can set up monthly installment agreement, if you have a significant tax due, you could qualify for an “Offer in Compromise.” The IRS will work with you to help settle your unpaid taxes.
Above all, filing your taxes could result in paying less tax due.
How to get started
To begin, you need your previous year’s income statements. If you don’t have them, you can contact your employer or request an income transcripts directly from the IRS, or call them at 1-800-829-1040. For state income transcripts, contact your state department of revenue. Keep in mind that you will need to paper-file both your federal and state returns.
I have my tax return, now what?
Since the IRS does not offer electronic filing for prior year returns you still need to mail a printed copy of the return to the IRS. When mailing your return be sure to:
Include all of your income statements.
Sign the tax return.
It is advised that when mailing your tax return, you obtain a tracking number to know when the IRS receives it.
What happens after I file?
The IRS does not assess any penalties if your tax return shows a refund. According to IRS statute of limitations, you can only receive a refund within three years of the original due date for prior year returns. For this reason, if you are within the window and have a refund, you should file your tax return.
For instance, in 2017, you can still get a refund for prior year returns going back to the 2014 tax year. Of course, you must file the return by the original due date of the prior year’s return.
The amount due steadily increases per month if your completed tax return has a tax liability. Presumably it makes sense to file all unfiled tax returns.
What about my unfiled state returns?
Similar to the IRS, your state’s department of revenue has limitations for issuing refunds and collecting tax liabilities. That said, you should visit your state’s department of revenue website for specific information and in the meantime use our website to complete your state taxes.
GET TAX RELIEF HELP TODAY
If you think that you may need help filing your 2017 tax return and past due tax returns or the offer in compromise process, you may want to partner with a reputable tax relief company who can help you get the max refund or resolve your tax balances.
Advance Tax Relief has a offices in Houston, TX and Los Angeles, CA and helps many individuals just like you work with the IRS to solve a wide variety of issues, including penalty waivers.
Call our team today at 800-790-8574 for more information. For a free consultation, schedule an appointment with us online.
However, it doesn’t matter where you live, we service taxpayers nationwide.