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How to file back taxes: Avoid any severe consequences

How to file back taxes: Avoid any severe consequences

The term 'Back Taxes' refers to the taxes that you owe for a previous tax year and have yet to file.

This can happen for various reasons, such as ignorance or financial difficulties.

However, it is crucial to rectify this mistake as soon as possible to avoid any legal repercussions.

Why file back taxes?

So, why bother filing back taxes? After all, if you haven't filed in a while, wouldn't it be best to just let it go and move on?

Unfortunately, the answer is no. Filing back taxes is essential for several reasons.

Reason 1

First off, you definitely want to avoid any extra interest charges and late payment penalties.

So, file your past due return and pay your taxes ASAP to limit those pesky fees.

Reason 2

Plus, you could be missing out on a refund if you don't file your return. If you're due a refund for withholding or estimated taxes, you need to file your return within 3 years of the due date to claim it.

And if you're eligible for tax credits like the Earned Income Credit, you need to file your return to claim those too.

NOTE! Here's something to keep in mind: the IRS won't give you any refunds if you have past due returns. They'll hold onto your refund until you've filed all of your past due returns.

So, if you're counting on that refund money, don't wait any longer to file your past due return.

Reason 3

Also, if you're self-employed, not filing your federal income tax return could cost you Social Security benefits.

Your self-employment income won't be reported to the Social Security Administration, which means you won't receive credits toward Social Security retirement or disability benefits.

Reason 4

And finally, if you need to apply for a loan, not filing your return could delay the approval process. Financial institutions, mortgage lenders, and other loan providers typically require copies of your filed tax returns.

So, if you want to buy or refinance a home, get a business loan, or apply for federal aid for higher education, you need to file your past due return first.

What happens if I don’t file back taxes?

If you choose to ignore filing back taxes, the IRS will not simply forget about you. The consequences can be quite severe.

The IRS can impose penalties and interest, which can compound over time, leading to an overwhelming tax debt. The IRS can also take legal action, such as seizing your assets or garnishing your wages.

Additionally, not filing your taxes can negatively impact your credit score, making it challenging to obtain loans, credit cards, or even a mortgage.

How to file back taxes (step by step)

Now that we've covered why you must file back taxes, let's go through the process step by step.

Step 1: Gather All Necessary Documents. The first step is to gather all relevant financial documents, such as W-2s, 1099s, and bank statements.

You will need this information to fill out your tax returns accurately.

Step 2: Determine Which Tax Forms You Need to File. Next, determine which tax forms you need to file. Depending on your circumstances, you may need to file multiple tax forms, such as a 1040 or 1099.

Step 3: Fill Out the Tax Forms. Fill out the necessary tax forms using the financial information you gathered in step one.

Make sure to double-check all the information you enter to avoid errors and to ensure accuracy.

Step 4: Include Any Payments Owed. If you owe any taxes, make sure you’ve included the payments within your tax forms.

You can make these payments using your credit or debit card, through a bank transfer, or by mailing a check or money order to the IRS.

Step 5: Mail Your Tax Forms. Once you've completed your tax forms and included any payment owed, you can mail them to the IRS.

❗ Pro Tip: Make sure to send them using certified mail so you have proof of delivery. Also make sure to find and pick the correct mailing address for your specific situation.

Step 6: Wait for a Response. After you've filed your back taxes, you'll need to wait for a response from the IRS. If you owe any taxes, you'll receive a bill for the amount due, which you can pay off over time if needed.

If you're eligible for a refund, you'll receive it once the IRS processes your return.

NOTE! In case you're unsure about important details on how to fill out the tax forms or have any questions, it is advisable to consult with a tax pro

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How late can I file back taxes?

So, how far back (how many years) can you file your taxes?

Generally, you have three years from the original due date of your tax return to file your back taxes. For example, if you didn't file your 2020 taxes by the April 15, 2021 deadline, you have time until April 15, 2024 to file them.

But, here's the kicker: if you owe any taxes for the years you didn't file, you might get hit with some pesky penalties and interest charges. Trust me, those can really add up fast.

To avoid any extra fees, it's best to file your back taxes as soon as possible.

Now, on a brighter note, even if you're filing your taxes late, you might still be able to get a refund. But, be aware that the IRS won't give you your refund until you've filed all your back taxes.

So, if you want to get your hands on that sweet, sweet refund money, you better get cracking and file all of your back taxes ASAP!


1. Is electronic filing possible for back taxes?

Electronic filing through the IRS is limited to the current tax year. For past due returns, electronic filing isn't available for individuals. However, registered tax preparers can file past due returns electronically using the IRS's Modernized e-File (MeF) System, subject to its availability as indicated on the IRS's MeF Status Page.

2. What are the consequences of not filing taxes for 3 years?

Not filing taxes for 3 years can lead to serious consequences, including substantial late fees, penalties, and accrued interest. The IRS may take legal actions such as seizing assets or garnishing wages. Additionally, this could negatively impact your credit score and future loan eligibility.

3. How long can the IRS pursue unfiled taxes?

The IRS typically has a 6-year limit to collect on unfiled taxes. However, if you haven't filed at all, the IRS can pursue collection for an indefinite period. It's crucial to file your taxes annually to avoid potential legal and financial complications.

Ines Zemelman, EA
Founder of TFX