Filing a tax return is required for most individuals every year. The IRS keeps tabs on those who are supposed to file but haven’t and can take serious action for unfiled returns. In severe cases, the consequences can be financially impactful and legally complex.
When tax returns are left unfiled, the IRS may impose penalties and interest, withhold refunds, or even file a substitute return on your behalf (an SFR), excluding most credits and deductions you might be eligible for. That’s why understanding how to file past-due taxes is crucial. While the process may seem intimidating, it's manageable with a structured approach. This guide offers steps to get back on track and ensure compliance with the IRS.
Is Filing for Past Tax Years Still Required?
If you haven’t filed in a few years, you might wonder if you still need to. In most cases, yes, you're responsible for filing those back tax returns. However, if you didn’t meet the filing threshold for any given year, filing may not be necessary.
Scenarios Where Filing Back Taxes Is Mandatory
Certain situations may require you to file previous years' taxes, especially if you owe specific taxes. These include:
Self-employment tax if your income exceeded $400
Alternative Minimum Tax (AMT)
Additional tax on retirement accounts or other tax-favored accounts (use Form 5329 if filing solely for this reason)
Household employment taxes (file Schedule H if only filing for this purpose)
Social Security and Medicare tax on unreported tips or wages from employers who didn’t withhold these taxes
Write-in taxes for items like uncollected Social Security/Medicare, Railroad Retirement Tax on tips, or certain health savings accounts (HSAs)
Advance Premium Tax Credit recipients may also need to file
For more guidance, refer to our post, “Do I Have to File Taxes?”
Benefits of Filing Past Due Tax Returns
Even if you aren’t required to file, there are advantages to catching up. Filing can secure any refund or refundable credits you’re owed for up to three years. For business owners, a net operating loss (NOL) carryover may apply if deductions exceed income.
Self-employed individuals should also file and pay self-employment tax from prior years, as it affects their Social Security benefits. Failing to do so may reduce your future benefits.
Steps to File Previous Years’ Taxes
Here’s a breakdown of how to tackle filing past-due tax returns:
1. Collect Required Documents
Request IRS wage and income transcripts to gather data from W-2s and 1099s, along with any estimated payments for the relevant years.
Document all income, including self-employment and investments, and identify any qualifying deductions or credits.
To prevent enforcement actions like an SFR, file as soon as possible and pay any taxes owed.
Determine how many years you need to file; the IRS typically requires the last six years of returns to establish compliance.
2. Complete and Submit Your Return
Prepare accurate returns by reviewing IRS transcripts to ensure all taxable income and withholding are reported correctly.
If unable to pay the full tax amount, consider arranging a payment plan with the IRS.
Attach a penalty relief request if eligible—single-year filers may qualify for relief on failure-to-file or pay penalties.
Send your completed Form 1040 to the address in the instructions, using certified mail to track delivery and secure proof of filing.
3. Track Processing and Follow Up
After filing, confirm with the IRS that your return was processed, especially if a prior substitute return or other IRS action exists.
Need Assistance with Filing Past-Due Returns?
Filing back taxes can be challenging, but you don’t have to face it alone. Whether you prefer to handle it independently using tax software or consult a tax professional, we’re here to help. Reach out for assistance with filing, navigating payment options, resolving compliance issues, and managing IRS communication.
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