Have unfiled taxes returns? This is a major error in judgment. You may be tempted to sit back and let things go for the time being. But before you do that, ask yourself this question: haven’t you waited long enough? Remember, the longer you go without filing your taxes and dealing with past returns the more problems you are making for yourself.
If you have not filed your taxes for several years here are some general guidelines to follow. It is recommended that you work with a tax professional if possible.
- Go over your records to determine the years for which you did not file a return. This may take some time, but you must make sure that you are 100 percent accurate. If you do not know for sure, contact the IRS for assistance. Don’t worry about “clueing them in.” Soon enough they are going to find out that you had not filed.
- Put together your income and expense records for the years that you did not file. Obviously, the more years you missed the more work you will have to put into this process. You can always contact the IRS for wage information, such as past W-2’s. The IRS only keeps your information on file for seven years, so anything older than this may be difficult to find with their help.
- Are you going to itemize or take the standard deduction? For many, the best way to answer this question is to consider their mortgage and student loans. Since you can deduct interest, most people with a lot of deductions in these two years decide to itemize. Of course, taking the standard deduction is always the simpler of the two.
- Hire a tax professional to help you prepare your returns. Remember, you need to file one return for each year that you missed; you cannot use the same form for more than one year. You may be tempted to file your own returns, but keep in mind that this is a lot of work. and often leads to errors.
- Mail your completed returns to the IRS. If you owe money with your returns, no matter how much, attempt to send what you can. This will make your life much less stressful down the line as interest will be much lower.
- Expect to receive an IRS letter soon enough stating that you owe penalties and interest on your late returns. If you are lucky you will be able to pay what you owe and then move on making sure that you never do this to yourself again. Unfortunately, this does not always work. You may have to contact the IRS about a payment plan, or maybe even submit an offer in compromise if you are eligible.
If you have not filed your taxes for several years the six steps above will help you work towards a solution. It is always recommended that you seek professional help from a licensed tax professional to ensure everything is done correctly and taxes, interest and penalties are minimized.