At Edge Financial, we’re all about taxes. We Ooh! at a perfectly prepared tax return, and we Ahh! at a smartly deducted investment loss. (Yeah, we’re tax geeks. Jealous?) It’s because we’re such tax geeks that it simply pains us to see unfiled tax returns. And if you just stumbled across this blog, there’s a chance you missed a return or two somewhere along the road. So we’re ready to cover filing past due tax returns.
Taxes are intimidating, and many taxpayers will either miss a tax return or file late at some point during their lives. You may have been overwhelmed with personal events, complex income streams, or just plain blanked on Tax Day.
Regardless how got into this situation, the IRS wants you to file your past due tax returns.
In our experience, tax issues—unfiled returns, tax debt, IRS wage garnishments—tend to come in groups. So if you haven’t filed a number of your past tax returns, you may be risking even bigger consequences and debt in the future.
With that said, every situation is unique. Your exact tax situation may vary, and your first step back to compliance with the IRS is getting your back tax returns filed.
If you’re looking to turn over a new leaf with the IRS, we’re here to help! Before you jump in, here are a few things you should keep in mind.
Tax issues often come hand-in-hand, but you shouldn’t mistake one for another. Especially when filing past due tax returns, it’s important to keep in mind that filing your taxes is not the same as paying them.
Filing taxes is an active process you have to complete each year, but you may not ever need to pay taxes. Depending on your withholding, you may not owe the IRS any money once it’s time to file. On the other hand, self-employed taxpayers estimate and pay their taxes quarterly—then file annually.
So, just because you haven’t filed your taxes, it doesn’t mean that you haven’t paid the IRS enough. Unfortunately, it doesn’t mean you haven’t accrued some tax debt.
As frightening as it can be to face the music and deal with the taxes you may have left unchecked for a couple years, you may be surprised at how many benefits filing your past due returns can offer you.
To start with, you may have a tax refund waiting for you that you aren’t taking advantage of. Remember, you may not owe the IRS any money—and it’s possible you have money come back your way. Without filing, you can’t claim proper deductions and other tax credits. You’d hate to leave money on the table just because you didn’t file, right?
Another benefit of filing your tax returns is that in the instance you do owe money, in most cases there are opportunities to lower your tax debt. Since your employer has been withholding your taxes for you, the IRS already knows (more or less) what you owe them. What they don’t know about is those deductions and tax credits you can rightfully claim. By filing your old tax returns, you can make those claims and lower your tax bill.
We’re all for you getting back on track as soon as you can, but depending on your specific situation, it’s worth doing some planning before you file all your past due returns. Instead, try following these steps.
The first step to getting back on track with you past tax returns is learning what to do next.
Hopefully, now you have a better sense of what you should be considering when filing your old tax returns. Whether you’re facing just one unfiled tax return or several, we understand it can be intimidating. We believe in you.
And that’s why we’re here to help.