Back taxes are unpaid taxes from the current year or previous years. Filing and paying off a past-due return can help you to get current with the IRS.
Updated Apr 19, 2024 · 2 min read Written by Sabrina Parys Assistant Assigning Editor Sabrina Parys
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Back taxes are taxes that are delinquent or overdue, typically from previous years. The IRS begins to charge penalties and interest on late or unpaid taxes the day after the tax filing deadline for that year. If the bill remains unpaid, notices will follow and the agency may eventually begin other collection measures.
The IRS typically doesn't charge penalties or fees on late or unfiled tax returns that result in a refund. However, there are many reasons why people in this group should consider filing their prior-year tax returns. For starters, you can't collect your refund until you file, and if you don't file within three years of the tax deadline for that year, you forfeit your right to collect the funds [0]
Internal Revenue Service . Don’t Lose Your Refund by Not Filing. Accessed Mar 19, 2024.» When was the last day to file taxes? Tax Day 2024 and other tax deadlines
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If you're behind on filing your tax return for this year or prior years, you still can. Here are some things to remember:
You'll need to gather tax documents for the tax year in question. For example, if you're filing your 2022 tax return, you'll need your W-2 , 1099s and any other pertinent documents from 2022. Our tax-prep checklist covers additional information you may need to access.
If you don't have those documents, you can request an IRS tax transcript for that year. Although you won't get exact photocopies of the documents, you'll get the information in those documents, which you'll need to get your return done.
Don't file a 2022 tax return using 2023 forms. Tax rules and tax forms are different every year. You can search for older forms and instructions on the IRS website .
If you're behind on your taxes because you can't afford them, several tax relief options are available, including offers in compromise, penalty abatement and payment plans.
Many tax software packages allow you to file prior-year tax returns, and tax pros do prior-year returns, too. They can also help you discover which deductions and credits you might have been eligible for during the tax year.
Technically, you must file all required tax returns and the IRS can come after you for any year that went unfiled. However, IRS Policy Statement 5-133 also says that it takes managerial approval to go back more than six years to enforce delinquency procedures [0]
If you don't file a return by the tax day of the year it's due (typically in mid-April), you'll be subject to a late-filing penalty . On top of that, any taxes you owe after the filing deadline passes will begin to amass fees in the form of penalties and interest. The IRS will usually inform you that you're in delinquency by sending notices and bills to the address on file for you. If those bills are ignored, the agency will ramp up the collection process by assessing a tax lien and eventually a tax levy .
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Catching up on past-due tax returns can seem overwhelming, but there are a few things in it for you.
This is called a substitute return. The IRS takes the information it has on hand for you, uses it to file a tax return on your behalf, and sends you the bill. That may sound convenient, but it's almost always a guaranteed headache. In addition, the IRS often won't factor in any tax deductions or tax credits you might have qualified for, leading to a bill higher than what you might've had if you'd done it yourself.
Filing a tax return late and paying a tax bill late are two different things with two different sets of penalties. If you can't pay the bill, don't put off filing your tax return. The IRS offers payment plans (and other installment programs) to pay over time.
If you're due a tax refund for a prior year, claim it by filing your tax return for that year. You only have three years from the original tax return due date to claim old tax refunds.
Copies of current tax returns are a common requirement for getting mortgages and other loans, such as student or business loans. Being on top of your taxes minimizes issues with producing these documents when needed most.
Freelancers or other self-employed workers who don't file their tax returns won't receive credit toward their Social Security or disability benefits because their income hasn't been reported to the agency [0]
Internal Revenue Service . Filing Past Due Tax Returns. Accessed Mar 19, 2024. About the authorsYou’re following Sabrina Parys
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Sabrina Parys is a content management specialist on the taxes and investing team at NerdWallet, where she manages and writes content on personal income taxes. Her work has appeared in The Associated Press, The Washington Post and Yahoo Finance. See full bio.
You’re following Tina Orem
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Tina Orem is an editor at NerdWallet. Before becoming an editor, she was NerdWallet's authority on taxes and small business. Her work has appeared in a variety of local and national outlets. See full bio.
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