Did You Miss Doing Past Year’s Taxes? Don't Panic: File Late

There are plenty of reasons to miss your taxes. Some late filers worry that they'll owe more money than they can afford to pay; others because they've already missed returns in the past, and one more can't hurt, can it? Still others just don't get their hands on the necessary tax documents until that magical 15th of April is past. Dealing with the IRS is daunting -- it's a big organization without much of a sense of humor. But when you break things down, filing past year taxes isn't nearly so frightening.

Why File Your Past Year Tax Returns:

There are several good reasons to file late taxes. First of all the IRS may owe you a refund: many late filers are overjoyed to get a check in the mail, rather than a penalty. But it's important to act fast: the IRS will not pay refunds more than three years old. Acting fast can also cut your penalties: the IRS charges interest and fees on taxes owed, and these fees rise if they send the taxpayer a notice. However, once you have contacted the IRS, those fees drop -- from one percent each month to just .25% each month.

An even better reason is simple peace of mind: a late tax return is something that will continue to bother you if you don't deal with it -- and since it's hard to guess whether the result will be a minor inconvenience or a big financial issue, it's easy to just delay it. But what most late filers discover is that a refund is a possibility, and that a definite debt, with a firm payment plan, is better than an amorphous liability growing at an ever-increasing rate.

So You're Going to File -- Where Do You Start?

Once you've decided to file late, it's a good idea to get organized. It's important to gather any information you can about your financial situation from that time: your past year W-2, 1040, or 1099-R forms, your bank statements, your brokerage account statements, and any receipts for deductible expenses, as well as any records of charitable contributions. Of course, you won't necessarily need to use all of this information, but having it there gives you the option to use it if you would need to.

The next step is to determine just what you're trying to accomplish. Some people file their past year taxes because they hadn't filed before, and have decided to catch up. Other people didn't file late, but did make mistakes in their previous return. If you're in the latter category, your focus should be on reviewing the areas where it's easy to make minor mistakes -- erroneous deductions, mistakes on the categories of various kinds of income, or simple arithmetic errors. If you know what you need to correct, the procedure will be similar to the one you'd use if you were to file late.

Once you know what you're trying to accomplish, it's time to pick advisors who can guide you through the tax payment process. If you're going to file taxes late, the best plan is to go with a company that helps you file late taxes online. Online professionals such as ourselves are often best able to match their expertise to your particular situation, and they're able to fit new tax situations into an existing framework. For example, if you need help filing your taxes again because you forgot to include a charitable deduction, you could ask an accountant -- or you could contact us, who have already encountered this exact situation and can not only give you a by-the-book answer, but can also guide you past any of the tricky pitfalls that someone with less experience could miss.

Paying Your Past Year Taxes -- Don't Worry, the IRS Doesn't Bite

Once you've found out what your tax situation is, it's crucial to effectively plan around it. If once you file late you have a refund, you're in the clear (and studies show that late filers are unusually likely to get refunds). But if you owe the IRS money, there's no need to panic: the IRS is often quite willing to work with taxpayers to arrange a satisfactory repayment plan for their past year taxes. This will usually involve breaking a larger obligation into more manageable payments, and spreading these out over time. This is usually accompanied by a drastic reduction in interest rates -- the rates the IRS charges can actually be below the rights charge for heavily subsidized forms of debt like student loans and mortgages.

For an organization with such a fearsome reputation, the IRS is surprisingly easy to deal with when past year taxes need to be paid. We can help you file late with minimal hassle, and guide you to getting the most out of the filing process. Even if the fees on your past year taxes leave you owing the IRS money, it is not too hard to pay them back: as far as creditors go, they are astonishingly generous and easy to deal with. There are plenty of good (and not so good) reasons to miss that April 15th deadline, or to make a mistake or two on your returns. With such simple online tools as ours at PriorTax.com, high odds of a refund, and easy repayment in the event of a debt, there's no good reason not to file your past year tax return as soon as possible.