How To File Back Tax Returns

Key points in this article:

• Filing back taxes requires you to use all applicable IRS forms used on their respective returns.
• There is no statute of limitations on back taxes, but the IRS requires you to at least pay the previous six years to consider you “caught up”. Doesn’t mean they will necessarily ignore older unfiled taxes if they exist.
• However, unclaimed tax refunds you might be entitled to have an “expiration date” of three years.
• The IRS can send you a transcript with all your tax information if you require it to file any back taxes.
• It’s considered a good financial practice not to wait until the last moment to ask the IRS for an extension on your due.

Let’s say you didn’t file your tax return for a year (or a couple of years, maybe even three). The reason doesn’t really matter, maybe you forgot or didn’t have enough to think you’d have to pay taxes. Whatever the case, you might now be wondering if you’re still responsible for filing those late returns: The answer is a resounding “well, most likely yes”, at least for most taxpayers. There are exceptions for some people, of course, but the IRS won’t let it slide if you had to.

Well, should you file back taxes? Oh, absolutely, if you think they’re a headache right now, just imagine what a couple more years of penalties and legal trouble are going to feel like. But how do you even file back tax returns? Where does one even begin? If these or any other question around back taxes is in your mind, then you found the right guide.

Learn about the process of filing back taxes, the penalties that come when you don’t do it, and how to avoid getting yourself in such a mess in the future.

How Do I File Back Tax Returns?

If you have ever filed your own taxes, then filing back taxes really isn’t any more difficult than that. The part that might be complicated for some and definitely requires an extra dose of patience is getting the right documents and Tax Forms to do so, as well as backing up everything you write in the return. That last part can be particularly difficult as it implicates recalling income, deductions, and all sorts of financial information from years ago.

But first, let’s quickly go over what back taxes really are and why it’s important to be caught up with them, then we’ll take you step-by-step through the filing process.

What Are Back Taxes?

Simply put, back taxes refer to taxes that went partially or fully unpaid when they were due, almost always from previous years. This applies not only to federal taxes, but for state and local taxes as well; all of them accrue interest and penalties if you let them go unpaid after being notified. In this guide, we will focus exclusively on federal taxes.

The Importance Of Filing Back Taxes

Whether intentional or unintentional, taxpayers who are behind on filing or paying their taxes run the risk of getting a failure to file penalty, equal to 0.5% of the amount due; this penalty grows each month until it maxes out at 25% of what the taxpayer owes.This might not sound like too much, especially if you’re not a high-income taxpayer, but trust us: Add up the interests (which changes quarterly), the growing penalties, and even a failure to pay penalty which also grows monthly, and you will be facing an unnerving amount of debt in no time.

Unpaid back taxes are no laughing matter, especially for people who are strapped for cash and simply can’t pay them.The IRS does offer some relief to these tax payers in the form of payment plans and installment agreements, either short-term  or long-term (which can go up to 72 months in some cases). It’s even possible to apply and set up the agreement online to speed up the process. If you owe $50,000 or less in past taxes, you might be eligible for the One Time Forgiveness Program.

Now, for people who are not required to file, there are still advantages to doing so since you might get a refund on a tax withholding and refundable credits you might be entitled to. Even small business owners should be encouraged to file their back taxes on a bad year, since deductions exceeding their income for the year allows them to have a “net-operating-loss carryover”, which is essentially tax loss harvesting to offset their capital gains.

How Late Can You File Back Taxes

The IRS doesn’t really make any distinctions in regard to how many back tax returns you have to file; they much rather you would file and pay them all in a single showing. However, in practice, they only really require you to be caught up in your taxes for the past six years to be in good standing, but they can still go back longer than that and send you a notice to file in many circumstances.

That being said, it’s a different story if you’re trying to claim refunds and tax credits from past years, as you’re only allowed to do so for returns no older than three years. This makes it easy to miss out on refunds and even lucrative tax credits, especially for low-income taxpayers.

How To File Back Taxes: Step-By-Step

If you’re in a situation where you have to file previous years’ taxes but find the whole thing too complex to even know where to start, don’t worry. Our friendly and easy-to-follow guide will take you through each step of the process. Time to get it together!

Step 1: Collect All Necessary Documents Relevant To Your Return

First of all, you obviously need to know which year or years you’re doing this for. Remember that the IRS requires you to file returns for the current year and any that you’ve missed in the past six years to be considered compliant. Then, get as much printed or digital financial records as you can on your income and business expenses as you can for those years, since you will need them to back up the info you write into your return.

Once you have the documents, you may have to do some extra homework looking for all credits and deductions you qualify for, which might be a little more complicated if the rules for those changed during the period when you weren’t filing your taxes.

Step 2: Locate And File The Correct Tax Forms

Once you get your documents in order, it’s time to gather your past W-2, 1099, and 1098 Tax Forms, since their data will be very valuable to file a previous year return. After that, it’s time to contact the IRS themselves and ask for a Form 4506-T, which helps you request a transcript of your tax return information going back a full decade (it even works if you’ve never filed a tax return). This is to fill in the gaps on all the tax information you have collected so far.

Another thing to keep in mind is that you can’t, for example, file back taxes for the year 2020 using a 2024 tax form, you need to locate the appropriate forms that match the years you missed. It’s also important to remember that diligence in all of these data-gathering steps is vital to avoid misreporting anything in your return, which might be grounds for getting audited (which is no fun, believe us).

Step 3: Complete And Submit Your Returns

Once every last piece of data has been collected and accounted for, it’s time to exercise a little patience and complete each of your pending tax returns. Whether you choose to do it on your own, get help from a tax professional or use tax software is up to you, but do your best to get caught up on each and every year you haven’t filed (as well as the current one).

At each step of the way be sure to go back and compare the information you’re filling the Forms with against the transcripts sent by the IRS to ensure you’re not underreporting anything. If, as you file the returns, you realize that you won’t be able to pay the full amount of what you owe between current and past due taxes, start the process to request a payment arrangement.

The last step before submitting your returns is attaching a penalty relief request to them, especially if you have multiple returns to file, since this will partly mitigate the balance owed and the penalties from keep stacking up. Finally, it’s time to mail in or digitally submit your returns; if you’re mailing them in, get proof of filing to avoid more short-term problems before the IRS processes them.

Step 4: Pay Any Back Taxes Owed

Whether you reach out to the IRS to set up a payment plan for your back taxes or not, once the filing part is done you need to think about the best way to pay for them. If you can afford it, the IRS does offer taxpayers a full payment option, and this is definitely tempting since the installment agreements and plans all carry fees with them, and missing payments on them will cause the IRS to void the whole agreement.

Another option is filling out Form 2159, which is a payroll deduction agreement to essentially take out money automatically from your wages until the debt and all interest is paid in full.

Can You Claim A Refund On Back Taxes?

Yes, provided that you’re filing within three years past the due date of that particular tax return. After that, you’re out of luck and will not be able to claim the refund. Also, if you are paying back taxes through an installment agreement, the IRS will automatically use any refund or overpayment due to you to pay for the taxes you owe.

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Tips For Avoiding The Same Problem In The Future

Hey, we get it, taxes can be hard. We’re not experts because it’s easy, you know? Still, there are plenty of pretty simple habits you can create in order to make filing your tax returns easier than ever.

• Start collecting your documents early: Choose one static place where you’re going to be collecting all your tax forms and other related documents throughout the year. Year-end forms start arriving in late January, and by that time you should already have a pretty solid collection of documents. The forms you’ll most likely need are: Form W-2 for employment earnings; Form 1099-DIV for dividends, 1099-INT for interest, 1099-NEC is non-employee compensation, 1099-K for electronic business payment received, and 1099-R for redistributions; Schedule K-1 for everything related to a trust, business partnership, or S corporation; Form 5498 for contributions to your IRA, SEP-IRA and SIMPLE, and Form 5498-SA for ones made to your health savings account.
• Lock-in your filing status: Your filing status will define pretty much every calculation you have to make in order to file your tax return, so it’s important to consider it when collecting your documents and getting totals on your taxable income. Your dependents are also a big factor, so consider if your children, spouse, or any relatives qualify.
• Keep track of the year’s tax deadlines: Tax Day is April 15 on most years (unless it falls on the weekend). That much you should know by now, but there are a couple of other dates that you need to remember, such as the automatic extension deadline for 2024 tax returns (October 15, 2025), and the quarterly estimated tax payment due dates (April 15, June 16, September 15, and January 15 of the following year).
• Consider the impact of big life events: We’re definitely not saying that you need to plan your every movement and life event around your taxes, but it helps if you keep them in mind. Big life changes such as getting married, having a baby, retiring, buying real estate, and others can also affect what and how you file in your tax return for the year.
• Don’t be afraid to ask for help from the IRS: By now you should know we’re always advocating getting help from either tax professionals or at least from your tax software, but the IRS and the Taxpayer Advocate Service (TAS) are there to give you free tax counseling should you run into a very specific question or problem.
• Anticipate your need for an extension: Don’t wait until the very last moment to say “well, looks like I need some more time to file these taxes”. You can certainly request an extension well before April 15 and it takes no effort at all. Just remember that your extension applies to filing taxes only, not for paying them. It’s better to make an educated guess on how much you will owe and submit that amount along with your extension request.

Filing Back Taxes: FAQ

• Can you file back taxes online?

Yes, you can. You should be able to get the online tax forms and instructions on how to file your past due returns straight from the IRS.

• Can I get jail time for not filing back taxes?

Generally no, you won’t get jail time just for not filing your back taxes. As we have explained in other articles and guides, the IRS has to suspect (and prove) that you have knowingly, willfully and repeatedly ignored both your filing and paying of taxes in a way that constitutes tax evasion in order to get jail time. The most likely scenario is that you will get penalties thrown on top of your debt, which is a big problem in itself, but one that’s easier to solve than jail.

• How far back can I file my taxes?

Well, how far can you think back? There really is no official limit, but we agree that filing a return from, say 10 years ago, might feel like you’re doing an entirely different person’s taxes. If you’re filing particularly old tax returns, don’t hesitate to ask the IRS for help getting all the tax-related information they can give you, including transcripts from all the data they have on you.

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