Did You Miss Doing Past Years' Taxes? Don't Panic: File Late

Why File Your Past Year Tax Returns

Ask people why they fail to file late their taxes and you're apt to get a handful of common responses. Some late filers worry that they owe more money than they can afford to pay. Others don't file because they have already missed returns in the past and, well, 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 long gone. Dealing with the IRS is daunting too, for sure. It's a big organization with no evident sense of humor.

Yet, when you break things down, filing past year taxes need not be so frightening, and there are several great reasons to file your late taxes. First of all the IRS may owe you a refund: many late filers are surprised 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 after the tax return was due.

Acting fast can also cut your penalties: the IRS charges interest and fees on taxes owed, and these fees rise if they have to send the taxpayer a notice. However, once you have contacted the IRS, the fees are scaled down -- from one percent each month to just .25% each month.

An even better reason is simple peace of mind: not filing a tax return, even a late one, is something that will continue to nag at 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 financial black hole, it's easy to just delay it.

But what most late filers discover is that a refund is a definite possibility, and that a simple debt, with a clear-cut payment plan, is better than an amorphous liability growing at an ever increasing rate.

OK, So You're Ready To File Late - Now, Where Do You Start?

Once you've decided to file a given tax year, it's a good idea to get organized. It's important to gather any material you can about your financial situation for that year: your previous 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 get a clear idea of what you're trying to accomplish. Some people file their past year taxes because they hadn't filed before, and have wisely chosen to catch up. Others didn't file late, but made mistakes preparing their previous return.

If you're in the latter category, your focus should be on reviewing the areas where it's easy to commit minor blunders -- deductions you don't qualify for, category mistakes for various kinds of income, or simple math 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 late taxes, the best plan is to go with a company that specializes in late filing and can help you best file late taxes online.

Online professionals such as ourselves are well suited to match their expertise to your particular situation. 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: we have already encountered this exact situation countless times before and can 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 Really Wants To Help You

Once you've found out what your precise tax situation is, you should plan to tackle it right.

If you file late and get a refund (most people do!), you're in the clear. But if you owe the IRS money, there is 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 a period of time. That is usually accompanied by a drastic reduction in interest rates -- the rates the IRS charges can actually be below the rates charged for heavily subsidized forms of debt like student loans and mortgages, not to mention those extracted by most credit cards companies.

For an agency with such a fearsome reputation, the IRS is surprisingly easy to deal with when past year taxes need to be paid.

At PriorTax, we can help you file late with minimal hassle. We'll make sure you get the most out of the filing process. There may be a few good, and many not so good, reasons to miss that April 15th deadline. But, with the simple online tools we provide, not to say the high odds of a refund they make possible, and easy repayment in the event of a debt, there are no conceivable reasons not to file your past year tax return with us as soon as possible.