For 30 years, we've specialized in getting non-filers back into compliance the easiest and least expensive way. One of the most common misconceptions of filing back federal tax returns is that you have to file every year that hasn't been filed. While we can understand the common sense behind this thinking, it's wrong.
Technically, you are required to file all IRS Federal returns and that is the "letter of the law." However, in "real practice," the IRS almost never requires all of the returns. In most cases, they will accept the last seven years of tax returns to consider you "compliant." However, sometimes you could try filing even less. Let's look at the five most common scenarios:
1. Getting refunds? If you're getting refunds, file the last four years and enjoy those refunds. You can get a refund three years from the filing due date, meaning your 2014 refund, for example, is available through April 17, 2018 (deadline moved forward two days this year) or three years from April 15, 2015.
2. Replace returns IRS filed for you. If the IRS filed returns for you or Substitute for Returns, refiling them might reduce what you owe as the IRS doesn't give you deductions in their filing.
3. Can afford to pay? File recent years and pay penalties. If you are going to owe the IRS and have the ability to pay them, file just your most recent years (last two or three) and pay all the taxes due plus penalties and interest.
4. Can't afford to pay? File and settle! If you are going to owe money that you can't afford to pay, first see if you meet the criteria for an Offer in Compromise and then file seven to ten years of taxes. Later, settle the debt with the IRS. Your settlement will also restoring your Social Security credits at a substantial discount if you were self-employed and required to contribute to Social Security.
5. File if the IRS asks! After filing your three to seven years of taxes and the IRS still asks you to file an older return, file it!