If you have income in the United States, you need to file a tax return every year. If you have not filed taxes on time in the past, or have fallen behind on taxes, you should make up for it as soon as possible. The IRS can impose fines or penalties on people who fail to file, so the longer you delay, the more costly it will be. The tax filing process includes filling in the required information, preparing relevant documents, and submitting the completed tax form to the IRS.
Prepare Required Documents
Find out which tax year you need to file. If you are unsure of the tax years for which you have filed and for which you have not yet filed, ask the IRS directly. Visit the IRS website or call 1-866-681-4271 and ask an operator.
- Make a tax year form and organize copies of tax returns from previous years and receipts for tax payments or tax refunds. This will help you understand which years you still need to file taxes.
Look up tax forms from previous years, such as W-2 forms, 1099s, or 1098s. These are all documents required for tax filing and are crucial for filing tax returns and refunds. You can contact previous employers to check on your salary, but they may not always have it on file.
- If you can’t find some of the documents you need to file your tax return, call the IRS at 1-866-681-4271 and ask for “Request for Transcript of Tax Return, Form 4506-T” from the IRS. You can learn the relevant information on your W-2 form, 1099 form, and 1098 form. You won’t be able to get copies of Forms W-2, 1099, and 1098 directly, but you will have enough information to file your tax return.
- After requesting Form 4506-T, please allow at least 45 days to receive the relevant information from the IRS. Plan! You may not feel pressed for time, but being scrutinized while waiting for your tax return to be processed can still be terrifying.
Get your tax form. Be sure to use the correct tax form to file taxes. You cannot use the current year’s tax form to report income from previous years. You can obtain tax forms from the IRS website or from your local IRS. If you use a tax preparer service, you can also obtain your tax form from a tax preparer.
Declare
Prepare federal tax returns for the prior year. Fill in accurate information such as income and deductions, and use the tax filing guidance for the year you are filing. You can refer to the tax filing guidance provided by the IRS, ask a tax preparer for help, or use smart tax filing software to guide you through the tax filing process easily and effectively, such as TurboTax.
- Using professional tax filing services and tax filing software will help you file your taxes better. Start by talking to your tax preparer to get the full picture of what you need to file and seek advice before using professional tax preparation software. Although professional tax preparation software is slightly more expensive than TurboTax, it can ensure that you have all the required documents ready, follow the necessary steps, and ultimately save you time.
- On the other hand, using a professional tax preparation service can also help you save actual expenses. They will negotiate with the IRS on your behalf to find a solution that is more beneficial to you and helps you avoid unnecessary trouble.
File a tax return with the IRS. If the IRS sends you a letter about filing your tax return, use the address on the letter to file your return. Otherwise, use the address you normally use to file your taxes. For an introduction to addresses, see the tax filing guide or the IRS website.
Filing state taxes. If your state also requires tax returns, but like federal taxes, you also forgot to file state taxes, make them up as soon as possible. While the penalties for falling behind on state taxes may not be as severe as falling behind on federal taxes, filing state taxes is just as important and should not be ignored. Generally speaking, state taxes are usually much lower than federal taxes.
- Use the tax forms provided by your state. Check the Department of State website or contact the State Auditor’s Office. Note that you must use the current year’s form to declare taxes for that year. The forms vary from year to year, and using the wrong form may lead to application errors.
Select Payment Method
If you owe back taxes, consider payment options. You don’t need to pay off the tax arrears when you file your taxes. You can negotiate a payment method with the IRS later. If you use a professional tax preparation service, they will help you with these things.
- If you plan to negotiate a payment method with the IRS, it’s a good idea to include a check for part of your tax return with your return. Ask a professional tax preparer or IRS clerk about the first amount due.
- After filing your taxes, negotiate with the IRS how to pay the remaining tax arrears. You don’t need to be thoughtful about payment methods when filing. The IRS wants to receive your tax form first before discussing how to pay it.
Try to repay as much as possible in one lump sum to reduce interest. If you repay a certain amount, you don’t have to pay any other penalties for unpaid taxes. But interest is different, and interest will increase each month until you pay off the entire tax debt. Therefore, it would be to your benefit if you could repay a large amount of your tax bill as quickly as possible.
Negotiate a reduction in penalties for failure to file taxes on time. After successfully filing your return, you can negotiate with the IRS to seek relief from any penalties that may have been issued. This is called an Offer in Compromise, and it will be issued by the IRS if the IRS believes that the taxpayer is unable to pay debts including joint and several taxes.
- Explain to the IRS why you failed to file your taxes on time and show your efforts to pay off the taxes you owe. If you don’t succeed the first time, try again.
Why You Are Obligated to File a Tax Return
Failure to file your tax returns on time is against the law. Failure to file a tax return is a violation of federal law and is punishable by substantial fines or jail time. Complying with the law not only helps you relieve mental stress but also avoids the possibility of punishment.
By filing taxes on time, you can avoid penalties for not filing taxes, even if you cannot pay off the tax arrears. Not filing taxes and not paying taxes are two different things. The IRS issues hefty fines to those who don’t file taxes, and only a certain amount of fines if they file taxes but cannot repay them. Therefore, the smart choice is to file your taxes on time, regardless of whether you plan to pay them back.
- Some people may first estimate the amount of tax they need to pay, but then find that they cannot afford to pay it off, so they do not file a tax return. This is wrong. Even if you don’t plan to pay off the entire tax debt you owe, filing will at least allow you to avoid the double penalty for not filing and not paying.
Filing your taxes means starting the statute of limitations for an IRS audit and tax collection. The statute of limitations for IRS audits is three years, and the statute of limitations for tax collections is ten years. Filing taxes can activate the protection of the statute of limitations for you. However, if you do not file taxes, you give up this protection, and the statute of limitations may never start (which may result in serious penalties and fines for you).
You may also get a substantial tax refund. Includes tax refunds for the current year and the past three years. Not paying taxes but getting a tax refund from the government may sound unlikely, but it’s true. Filing your taxes may actually “make money.”
Reversal of your tax assessment. If the IRS issues you a Notice of Assessment, it assesses the amount you owe. Filing your taxes for past years can help you eliminate this assessment, which could have levied a large amount on you. You will only have to repay the amount you owe, plus penalties and interest accordingly.
Tips
- Use a professional tax preparation service. Even if you’re able to file your taxes on time, the tax filing process can be cumbersome. If you haven’t filed a tax return in years, you might consider asking a tax preparer to help you fill out your tax forms and negotiate with the IRS on your behalf.
- File your taxes on time. To avoid penalties and fines, do not delay filing your tax return. The deadline for individual taxpayers to file taxes is April 15 each year.
- Refusal or failure to file a tax return on time with the IRS is punishable by up to one year in prison and annual fines of up to $10,000.