Why didn't you file your tax returns? (Common explanations)
- You knew you'd owe taxes and feared the consequences, so you didn't file.
- You couldn't find the records to do them and the years compounded.
- You divorced, your "ex" was the filer, and now you're lost.
- Your accountant died and you panicked and stopped filing.
- You have so many years to file that you're paralyzed with fear and inertia.
- You're afraid that investigating your situation with the IRS will stir up a bees' nest.
Why should you file your Back Tax Returns?
- It's the law. Not filing a tax return can be a felony.
- It's hard to live an adult life as a non-filer. Buying or refinancing a house usually requires that you've filed your returns, for example.
- If you want to get married, not filing might be considered a deal breaker to a future spouse.
- The IRS might file substitute-for-returns for you without deductions and you'll owe more taxes than if you'd filed them yourself.
- Your passport may not be issued by the federal government if you haven't filed your returns, making it hard to travel outside the U.S. (In fact, as of legislation passed in November 2015, if you owe the IRS $50,000 or more your passport will be revoked.)
- If you're self-employed, you might be missing out on increased Social Security contributions for when you retire.
- To get health insurance on a health insurance exchange or healthcare.gov, which require you to have filed.
- You might need to file your recent tax returns to get student loan aid for your kids (FAFSA).
- To reduce your vulnerability to identity theft. Our recent observation has been that 50% of multi-year non-filers have experienced a malicious attempt to intercept their refund and/or file under their social security number.
Do you need to file every single year?
In almost every case we see, no, you do not need to file every year. The IRS generally wants to see the last six years of returns on file. But it depends. If the IRS filed for you, you'll want to replace the Substitute for Returns with returns of your own to reduce the balance they assessed. If you're getting refunds and won't owe taxes, you can focus on the last four years only (as the statute of limitations prevents refunds beyond 3-4 years.)
How do your tax professionals at Washington Tax Services handle this for you?
- Research and analyze.
We get thorough information on your tax situation, treading very lightly by posting Power of Attorney for you and researching your record online. By acquiring your tax info online, we avoid direct contact with the IRS and that might flag your situation.
- Make a determination, order records and file the returns.
We'll determine the amount of years that need to be filed. All of the IRS records will be faxed to our office or we'll download them off the IRS e-services website.
- See if IRS filed for you and if you owe money.
There are cases where the IRS filed for you—creating balances due—and you're likely going to be a hardship candidate. In these scenarios, we might not file the returns as it's a waste of effort; you're going to negotiate with them anyway so why bother?
- See if you're getting refunds.
Before April 18, 2023, you will receive tax refunds for the years 2019, 2020, 2021 & 2022 if you are entitled to them. After April 18th, you will lose the 2019 refund as the statute of limitations prevents refunds after three years. Pandemic Relief Refunds? If you did not receive the $1800 and $1400 stimulus payments for tax years 2020 2021, they will be available until April 15, 2024 and April 15, 2025, respectively.
- Create a template for future compliance.
How are you going to avoid tax problems in the future? Setting up a corporation? Remaining a sole proprietorship? Handling the bookkeeping via QuickBooks? We promise to assist you so you never run into a tax problem, breaking the non-filing habit once and for all.
Talk with a tax expert for free (888) 282-4697
Registered members of the National Association of Enrolled Agents.
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