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What are back taxes?
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.
» When was the last day to file taxes? Tax Day 2024 and other tax deadlines
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How to file back taxes
If you're behind on filing your tax return for this year or prior years, you still can. Here are some things to remember:
1. Gather your documents.
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.
» Learn more: Who needs to file a tax return? IRS income limits and other requirements
2. Get a transcript if you need one.
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.
3. Use the proper forms.
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.
4. Consider a payment plan if you can't afford your tax bill.
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.
5. Don't be afraid to ask for help.
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.
» Learn more: How to find the best tax preparer or tax advisor near you
How many years can you file back taxes for?
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.
What happens if you don't pay your back taxes?
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.
» MORE: Tax relief and resolution: 5 ways to deal with tax debt
Simple tax filing with a $50 flat fee for every scenario
With NerdWallet Taxes powered by Column Tax, registered NerdWallet members pay one fee, regardless of your tax situation. Plus, you'll get free support from tax experts. Sign up for access today.
What are the advantages of filing back taxes?
Catching up on past-due tax returns can seem overwhelming, but there are a few things in it for you.
1. You avoid having the IRS do 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.
2. You can pay your tax bill in installments.
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.
3. The government might owe you money.
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.
4. You can avoid problems getting a loan.
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.
5. Safeguard your Social Security.
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.
FAQs
Additionally, you have to consider the state you live in. For example, if you live in California, they have a legal right to collect state taxes up to 20 years after the date of the assessment!
How many years can you go without filing taxes? ›
Additionally, you have to consider the state you live in. For example, if you live in California, they have a legal right to collect state taxes up to 20 years after the date of the assessment!
What is the IRS 6 year rule? ›
6 years - If you don't report income that you should have reported, and it's more than 25% of the gross income shown on the return, or it's attributable to foreign financial assets and is more than $5,000, the time to assess tax is 6 years from the date you filed the return.
Can you file 3 years worth of taxes at once? ›
How many years can you prepare back taxes? You can prepare returns up to three years old with TaxSlayer. This means that in 2024, you can use TaxSlayer to file your 2023 tax return, plus you can prepare back taxes for the years 2022, 2021, and 2020. If needed, you can file back further using paper filing.
What is the best way to resolve back taxes? ›
5 tax relief options
- IRS payment or installment plans. If you need more time to pay your tax bill, check to see if you qualify for an IRS payment plan. ...
- Offer in compromise. ...
- "Currently-not-collectible" status. ...
- Penalty abatement. ...
- Hiring a tax relief company.
Generally, if you haven't filed in 10 to 20 years, the IRS will only make you file the last six years of returns. However, the agency may make you file older returns if you owe a substantial amount or if fraud is involved.
Who qualifies for the IRS fresh start program? ›
General Initiative Eligibility
You should be current on all federal tax filings and owe no more than $50,000 in back taxes, interest and penalties combined. If you're a small business owner, you could be eligible for relief under the Fresh Start Initiative if you owe no more than $25,000 in payroll taxes.
Does IRS destroy tax returns after 7 years? ›
Period of Limitations that apply to income tax returns
Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction. Keep records for 6 years if you do not report income that you should report, and it is more than 25% of the gross income shown on your return.
Can the IRS come after you after 10 years? ›
The IRS generally has 10 years – from the date your tax was assessed – to collect the tax and any associated penalties and interest from you. This time period is called the Collection Statute Expiration Date (CSED). Your account can include multiple tax assessments, each with their own CSED.
What happens if you have unfiled tax returns? ›
There can be hefty penalties.
Years with tax balances due will have penalties, such as the failure to file and failure to pay penalties. These penalties combined can accumulate, over time, up to 47.5% of the tax bill. It's important you prioritize this issue, to avoid potential tax evasion issues.
Yes. You can file two years of tax returns, however, they must be completed separately. For example, you would have to input your 2020 tax forms in your 2020 tax return and your 2021 tax forms in your 2021 tax return.
Can I file multiple year tax returns at once? ›
Each tax year has to be filed separately using the forms for the specific tax year. They cannot be combined in any way--do not even put them in the same envelope when you mail them. Software for past years is available back to 2019.
Do I have to file taxes if I don't owe anything? ›
Generally, you need to file if: Your gross income is over the filing requirement. You have over $400 in net earnings from self-employment (side jobs or other independent work) You had other situations that require you to file.
Are back taxes ever forgiven? ›
For those in extreme financial distress, filing for bankruptcy may potentially allow certain old tax debts that meet very specific criteria to be discharged (forgiven) in the bankruptcy. This includes income tax debts over three years old which were filed on time originally and meet other non-fraud provisions.
Can I negotiate with the IRS myself? ›
Hiring professional representation will require more time in the process to allow your representatives the ability to get the necessary information about your case, which could increase costs determined by time. You can talk directly to negotiate a deal with the IRS.
How much will the IRS usually settle for? ›
How much will the IRS settle for? The IRS will often settle for what it deems you can feasibly pay. To determine this, the agency will take into account your assets (home, car, etc.), your income, your monthly expenses (rent, utilities, child care, etc.), your savings, and more.
What happens after 3 years of not filing taxes? ›
What Happens if You Don't File Taxes for 3 Years? If you haven't filed taxes in three years, you can lose the chance to claim a tax refund. Additionally, the Internal Revenue Service may file a tax return (called a substitute for return or SFR) on your behalf, and then, the agency will try to collect the tax bill.
What happens if you skip years filing taxes? ›
It's illegal. The law requires you to file every year that you have a filing requirement. The government can hit you with civil and even criminal penalties for failing to file your return.
Do you have 7 years to file taxes? ›
You can file back taxes for any past year, but the IRS usually considers you in good standing if you have filed the last six years of tax returns. If you qualified for federal tax credits or refunds in the past but didn't file tax returns, you may be able to collect the money by filing back taxes.
Can you file taxes 5 years later? ›
You risk losing your refund if you don't file your return. If you are due a refund for withholding or estimated taxes, you must file your return to claim it within 3 years of the return due date. The same rule applies to a right to claim tax credits such as the Earned Income Credit.
