How to File Back Taxes – A Comprehensive Guide in Plain Language

If you didn’t pay your taxes by the official deadline—don’t worry. It’s not too late! You can file back taxes, but you’ll need to fill out the correct forms from the IRS.

Therefore we’ve created a step-by-step guide on how to file back taxes in order to help you easily navigate this somewhat tricky process.

Continue reading to learn more!

What are Back Taxes Exactly?

Back taxes are essentially partially or fully unpaid taxes from the previous year. It’s possible to have unpaid taxes at the local, state, and/or federal levels. And although you can still pay them, you will likely owe extra money due to interest or penalties.

Reasons for Back Taxes

Some of the reasons that taxpayers may have for filing back taxes are:

  • Failing to report all income earned during the tax year
  • Neglecting to file a tax return
  • Filing a return but  failing to pay the tax liability

If the taxpayer doesn’t file a tax return, a 0.5% penalty is placed on the amount due. This fine is enforced monthly until the taxpayer pays the total amount or the penalty reaches 25% of the taxes owed.

Consequences for Late Back Taxes

If you fail to file the previous year’s taxes, it could have severe consequences. The Internal Revenue Service (IRS) can press criminal charges leading to jail time in extreme cases.

Additionally, the IRS can seize assets, and property, garnish your wages and even place a lien on your property to recoup the money you owe.

Filing Back Taxes

You must file any back tax returns to potentially claim refunds or prevent further penalties and interest. 

Below, You’ll find our step-by-step guide on precisely how to do so.

Step 1

First, gather any pertinent information concerning your taxes for the year in question. For example, you’ll need your W-2 or 1099 forms and any info regarding credits or deductions you may be eligible for.

Step 2

If you don’t have the papers or info mentioned above, you should request a tax return transcript from the IRS (also known as a 4506-T form). This service allows you to request info for as far back as 10 years.

You can electronically receive this form. However, you’ll need to pay a fee for the full version of the transcript.

Step 3

Please be aware that tax return forms often change due to new legislation. So, make sure to use the correct form for filing your back taxes for the year. In fact, the IRS website has a database of prior-year documents.

Step 4

If you need even more help filing back taxes, you should hire a professional, such as an accountant or tax lawyer.  Plus, plenty of accounting software can guide you through the process.

Step 5

Finally, once you’ve filled out all of the proper forms, you’ll need to mail them directly to the address provided by the IRS.

Filing Multiple-Year Tax Returns

It is possible, but you’ll need to file each year separately. This means you need separate past-due tax return forms for the years you want to file back taxes.

Software for Back Tax Filing

You can use tax software to file your current or your back taxes. Therefore, we have listed a few reputable software companies for filing back taxes below.

  • TurboTax – This online software claims that it can quickly and easily help you fill out the correct tax forms, despite your situation.
  • H&R Block – With this software, doing your back taxes may be a little more complicated because you’ll need to find the edition of the software for the year you want to file for.
  • FreeTaxUSA – This software lets you choose the year you want to file back taxes. And the best thing about this one is that it’s free!

How to File Back Taxes Without Records?

As we previously stated, If you want to file your taxes from last year but are missing some documents, you should request a tax return transcript from the IRS (also known as a 4506-T form). This service allows you to request info for as far back as 10 years.

You can electronically receive this form. However, you’ll need to pay a fee for the full version of the transcript.

You can request transcripts online through the IRS website

These are the transcripts types that are available online:

  • Tax Return 
  • Tax Account 
  • Record of Account 
  • Wage and Income 
  • Verification of Non-filing Letter

You’ll need an existing IRS username or ID.me account to request any of these documents. However, it’s also possible to receive the correct records via postal mail.

How to File Back Taxes for Small Business

If you are a small business owner that needs to file back taxes, you’re in luck! In this next section, you’ll learn everything you need to get it done quickly and easily.

For example, suppose you’re an aspiring small LLC business owner. In that case, you should employ the services of a company like Swyft Filings to help build and maintain your business.

Step 1

Request your transcripts from the IRS and gather all the information from your records. Bear in mind that this can be an extensive process. Since this is a business tax return, you’ll need a profit and loss statement and a balance sheet.

You’ll also need the correct info regarding your employees and their wages for employment tax returns. Fortunately, you can request extra time if you think you’ll need it.

Step 2

Find out if there’s any special processing needed like date-stamping or filing with an IRS compliance unit.

If you are filing for more than one past-due return, the IRS typically requires that you file returns for the past year and six years prior.

Step 3

The next step to file old taxes is to complete your business tax returns correctly with all the information. Make sure that you double-check this against your IRS transcripts. 

Step 4

If you’re unable to pay the total amount in full, you can request to make monthly payments. In addition, you may qualify for penalty relief if you’re filing for only one past-due return.

Step 5

Send your past-due return to the correct IRS location. 

Step 6

Finally, you should request your business’s account transcripts to check if the IRS has already processed your tax return. This is very important when filing back taxes. Remember that sometimes it can take up to six months for processing.

If you feel a bit overwhelmed, we should also add that many great accounting software companies are available to simplify this process. 

Expert Help

It doesn’t matter whether you’re filing for yourself or your company, sometimes the process can be too much to handle, and you need professional help. Below, we’ve listed some critical info you will need when hiring a professional service.

Most experts will require that you can provide:

  • A copy of your IRS notices
  • All information you have for the years that you want to file past-due returns 
  • Proof of tax payments you’ve made
  • IRS transcripts 
  • A copy of tax returns filed the previous year and after the years that weren’t filed
  • For businesses: profit and loss statements, employee records, balance sheets, etc

Keeping Records of Your Tax Returns

It’s not just about filing back taxes and getting a refund; you should also save copies of your tax returns. By doing so, you can protect yourself from potential problems and get some help preparing for next year’s taxes.

 Here are some simple tips!

  1. You should keep your tax returns and any additional documents or forms for at least three years.
  2. Before throwing them out, check their status and decide if any insurance companies or creditors might need them. For example, if you applied for a small business loan, you should keep the forms for your records.
  3. If you decide to throw them out, it’s important to shred them. They contain sensitive information that could lead to identity theft.
  4. The best place to store your tax returns is a fire-proof safe, together with other documents of value. 

Wrapping Up

Hopefully, our step-by-step guide has answered any questions you had regarding how to file back taxes. As you can now see, this process can be tedious, but with the proper guidance or professional help, it’s a breeze.

FAQ

How to File Back Taxes Without W-2?

If you can’t get a copy of your W-2 or a 1099 form, don’t worry! It’s still possible to file back taxes by using a 4852 paper

How far can you go back to file taxes?

The IRS lets you claim tax refunds and tax credits for the last three years only, but you can go back as far as six years, but you won’t be able to claim refunds. If you don’t file three years after the date on your tax return, you may owe the IRS even more taxes.

How much does it cost to file back taxes?

The minimum penalty for late filing is whatever is less between these two: 100% of your unpaid tax or $205. There will be interest on your delinquent taxes, and this interest is usually set every three months. 

If you filed on time but don’t pay the total amount, the interest rate is 0.5% per month of the tax you owe until you fully pay it back. 

The interest rate of 0.5% rate will increase to 1% if the tax remains unpaid ten days after the IRS issues a notice of intent to levy.

Can you file taxes from last year?

Yes, but the process is different than filing for the current year. You need a past-due return rather than a regular tax return.

 

ABOUT AUTHOR

Ema is an ESL teacher (who is highly curious about technology in education) and a content writer. She enjoys writing on all sorts of subjects and she loves a good challenge. When she’s not working, you can find her reading a mystery thriller or watching “Shutter Island” for the umpteenth time.

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