If you owe back taxes you may be thinking you can file them using Turbo tax software, and you can, but there is a catch.
Below are the basic steps for preparing for and submitting back tax filings, however be aware that it is often the case that you may have incurred penalties and interest on any taxes that were not paid in a timely manner. Therefore, before you decide to submit back tax filings using turbo tax or any other software it is wise to get a free back tax consultation on how to do this properly and avoid potential mistakes that could cost you a great deal of time and money.
Get Prepared To Submit Back Tax Filings with Turbo Tax
Step 1: Gather your tax documents
To file your back tax returns, you will need the W-2s or 1099 forms you received for those tax years to report your income. If you are eligible for deductions and credits, you must also gather any receipts or other supporting records that prove your eligibility to claim them.
Step 2: Request missing documentation
If you are missing any of your tax documents from the last 10 years, you can request a copy from the IRS by filing Form 4506-T, Request for Transcript of Tax Return.
Use this form only to request W-2s, 1099s and even 1098s that may provide support for some of your deductions.
- Though you will not receive a duplicate of the original form, the IRS will provide you with a transcript of all relevant information, which is sufficient for filing your back tax returns.
- It can take the IRS up to 45 days to process your request.
Step 3: Download prior year IRS tax forms
You must always file your back tax returns on the original forms for each tax year you are filing. You can always search through the IRS website for the forms, but for quicker access, you should use sophisticated tax preparation software, such as TurboTax.
Step 4: Prepare your back tax returns
You cannot complete prior year tax forms using instructions from the current tax year.
- The tax law changes every year, and using the wrong instructions may require you to prepare the return over again.
- Double check to make sure that the instructions you are using are for the same tax year as the tax return you are preparing.
Step 5: Submit your forms
Submit the forms to the IRS at the address listed in the Form 1040 instructions.
- Always use the forms and instructions from the exact year you are filing for. Turbo tax has most if not all past year forms and instructions.
- Turbo Tax does NOT offer efile options for back taxes, so you will need to mail your printed tax returns directly to the IRS.
- If you owe additional income tax for any of the prior years, remember to first check with a professional to ensure the amount is correct of if you qualify for any form of relief. Only then should you include as large of a payment as you can to reduce your back tax interest charges.
- Unlike tax penalties which stop accruing when the maximum is reached, monthly interest still accrues indefinitely until the tax is paid.
- Once the IRS receives your tax returns, you should expect to receive notice of the exact penalty and interest charges you are responsible for. You can learn more about IRS tax penalties and interest chargers here
Tax payers should be aware that when filing back taxes it is a critical time to ensure your returns are completed correctly. If you think or know that you owe back taxes, penalties and interest it is wise to have your situation fully reviewed by a tax professional who is experienced in back tax issues. Taking the time to professional submit back taxes can save you a great deal of time, money and stress! We make this process easy and affordable with a free back taxes consultation, no games, just a thorough review and consultation – no credit card required.
What Happens If I Don’t File Back Taxes?
If you have back taxes, it’s important to file a past-due tax return as soon as possible. If you don’t file or pay your taxes in full by the deadline, the IRS will begin to charge penalties on the amount you owe. Types of penalties include:
- Failure to file penalty—if you miss your filing deadline and have not filed an extension, the IRS imposes a penalty of 5% of the amount of your unpaid taxes. The IRS will continue to charge an additional 5% every month for up to five months. There is also an additional late-filing penalty for returns that are filed more than 60 days after their due date. If your return was due on or after Jan. 1, 2020, your penalty is equal to the full amount of your overdue tax bill, or $435, whichever is less.
- Failure to pay penalty—If you don’t pay your taxes by the deadline, the IRS will charge a 0.5% penalty for each month that your payment is late. The maximum failure to file penalty is also 25%, however interest will continue to accrue until your tax liability is paid in full. 4
There is also a penalty for underpaying estimated taxes, which are typically due April 15, June 15, September 15 and January 15. (The 2021 first estimated tax deadline is April 15, 2021, despite the later deadline for filing 2020 income taxes.)
In addition to interest and penalties, other inconveniences can result from not filing and paying your taxes. For example:
- The IRS will not issue refunds to taxpayers who are past due.
- You may have trouble getting a mortgage, federal financial aid, or other loan.
- You will not receive credits toward Social Security benefits for self-employment income.
- The IRS may file a substitute return for you, which may not include all of the credits and deductions you qualify for.
- The IRS may begin collections, which could include a levy on your bank account or paycheck or a federal tax lien on your property.
- You may be subject to additional enforcement penalties or criminal charges.
