When a new tax season starts, people tend to forget about the old one, often to their peril. See, millions of American’s still last year’s taxes (or the year before or the year before) think about,. Sometimes it’s because they still have a valid extension, sometimes it’s because they forget and now they want to deal with it even less, and sometimes it’s because they weren’t aware they were eligible to file taxes. It’s the last one that the IRS will really use to get you.
Fortunately, filing past year taxes is possible at any time of the year. Even more fortunately, most people who file back taxes find out they’re eligible for a refund! The important thing is to file taxes before that refund gets garnished by fines. Here’s our back taxes advice
The first thing to do is remember that filing past year taxes is exactly the same as filing any taxes. There are a few extra questions on the forms, sure, and it might take longer to get everything processed, but the heart of it is the same: W-2’s, 1099s, 1040EZ, etc. There’s no more challenging than any of other type of taxes, which means you should worry about the actual process of doing them just the same.
The second thing is to remember that the IRS wants your money, but they need you to get it. You may find out filing past year taxes that you owe money and that’s scary. With Failure to File Penalties and other fines, it can amount to a lot. But the IRS can’t take your money if you go bankrupt, so having you be able to pay them off is in their interests. That’s why suggesting and working towards a payment plan is a good idea. It gives them what they want (your money) and it gives you what you need (a reasonable way to pay it back). Win win.
The third thing to remember is that filing past year taxes is essential to your financial future Like any debt, having unpaid past taxes can reflect badly in credit scores and affect things like bank loans, mortgages, etc. The good news is as soon as you start filing past year taxes, that all starts to go away. You move away from the state of being in debt, to a state of repaying a debt, which is a much better place to be.
Lastly, don’t forget that you can file past taxes online and that a great number of Americans filing past year taxes will receive refunds. There’s no reason not to file today!