- September 1, 2021
- Posted by: blogtester
- Category: Uncategorized
Any unfiled tax returns from prior tax years are referred to as back taxes. You do not have any time restriction to file back taxes. However, if you wait over three years, you will forfeit whatever return you may have to pay.
If you made any money during those years, the IRS would ultimately catch up with you since they would have obtained information returns from anybody who paid you. It will let them know of the fact that you earned taxable income.
You should always file back tax returns on paper and mail it to the Internal Revenue Service. Also, you cannot do it online. You may be able to create your returns using tax software. But, you’ll still need to print these and mail those to the IRS.
Six Years to File Back Taxes, Three Years for Claiming a Tax Refund
There may not be a legal limit on how long you have to file back taxes. But, that doesn’t mean the IRS doesn’t want your returns as early as possible. To be regarded in “good standing” with the IRS, you must have submitted tax returns for the previous six years. You must also file for three years if you wish to collect a tax refund from a year prior.
If you wait too long and have any earnings during the year in issue, the IRS will intervene and file a replacement tax return for you. This may not benefit you. Further, they will not claim any tax credits or exemptions that you may be eligible for. Without these, they’ll produce a rudimentary tax return for you. So, you’ll almost certainly owe more than that if you made the return yourself or hired an expert to do it.
However, you will receive a warning before this occurs. You’ll get a CP3219N Notice of Deficiency, which grants you 90 days. You can either file your previous tax return personally (including those deductions and credits) or submit a petition with the Tax Court to defend your case.
Required Documents To File Back Taxes
For any income you received during the tax year in question, you’ll require Forms W-2 and 1099, as well as individual tax returns and forms in that year. You can’t, for example, submit a 2020 Form 1040 to declare income from 2019. Moreover, you should also acquire supporting evidence for any expenses you made throughout the year that may be tax-exempt or make you eligible for tax credits, like bank and credit card bills for that timeframe. If any tax papers are absent, you may seek copies from the IRS by filling out Form 4506-T.
To file back taxes on your own, you can use easy software to prepare your tax returns. If you opt to hire a professional, seek someone who has expertise in preparing back taxes. They can help you if you need help with inadequate tax documents or an advocate to deal with the IRS on your case.
Getting Debts Paid and Tax Refunds
It’s extremely straightforward to pay any taxes owing on each completed return. The IRS wants your money, making the procedure to file back taxes as simple as possible. You can settle by direct debit from your bank or savings account on the IRS’s Direct Pay website. The IRS also accepts credit card transactions.
Please remember that refunds, audits, and debt collection all have deadlines. In most situations, your refund “expires” three years after the deadline for filing your tax return. However, if you owe other tax liabilities, such as a sum owing from a previous year, your return will usually be used to pay off those debts.
If you owe the IRS money, create an action plan to pay off your tax debts. You may be able to work out an installment agreement for a monthly repayment schedule with the IRS or request an offer in compromise.
An Installment Agreement
You have up to 72 months to pay under an installment arrangement. However, you must owe the IRS $50,000 or less to qualify. You can request an installment agreement online for a charge if you owe less than that sum. If you owe less than $10,000, your request will get accepted instantly. Irrespective of what you owe, you can file IRS Form 9465, the Installment Agreement Request, with your tax return.
An Offer in Compromise
An Offer in Compromise is a little more complicated. It entails working out a deal with the IRS to pay less than the entire amount owed. An offer in compromise is usually granted if you cannot pay in full through an installment plan, and it comes with a charge. This method will almost certainly need the assistance of a professional.
You can file back taxes with the IRS at any moment. Mail your back tax returns to the IRS in different envelopes, and via certified mail so you have confirmation that the IRS has received each one. The IRS takes around six weeks to process correctly submitted back tax returns.
For any doubts or questions, do not hesitate to contact Platinum Tax Defenders.