File Your Past Year Taxes–And Get Money Back!

Most people who file past taxes get a refund, and even if you don’t, you can minimize your debt by filing

A lot of people who owe back taxes see themselves as caught in a terrible catch-22: they think they owe lots of money, but they have no money to pay back their debt. For most people who still have to do past year taxes, this is simply not true. Most people who have yet to file taxes for past years are actually owed money by the government.

And for those who do owe money? Well, there are plenty of good reasons to still file your past year taxes:

Just filing your past year taxes doesn’t mean that you are expected to pay the whole balance instantly. Instead, it accomplishes a few important goals:

• Starts the timer for the 10-year statue of limitations for past year taxes collection. This means it starts the process that help get you out of tax debt even if you can’t pay much.
• Failure-to-file penalties are steep–5% a month and up to 25% of what you owe, and you may also get a failure-to-pay penalty. Filing past year taxes stops that interest and those penalties from accruing.
• Filing past year taxes shows good faith, which is important in any interest negotiations with the IRS. The more you show yourself to be a responsible citizen, the better the IRS will treat you and negotiations will go.
• Tax relief can’t even start if you have a failure-to-file or failure-to-pay on your records. When you file past year taxes, you get rid of those flags and can get started on relief negotiation with the IRS.

By filing your past year taxes–even years after the fact–you demonstrates that this is a mistake you’re trying to correct. The IRS doesn’t expect you to give them the balance of your debt. Instead, because they want your money, they are often surprisingly accommodating.

Additionally, if you only think you’d have debt, I highly suggest you file as soon as possible. The majority of people who have failed to file past year taxes are owed money. By not filing past year taxes, all you’re doing is letting the IRS take penalties of out your money and reducing the amount they have to give you.

The sooner you file those old, past year taxes you’ve let sit the sooner you can move on with debt or get the refund you’re owed. So find a reputable prior tax service and get started today!

Photo via faith goble on Flickr.

This entry was posted on Tuesday, May 7th, 2013 at 4:58 pm and is filed under Tax Tips and Tricks, Taxes for Prior Years. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.