Tips On How To File Back Tax Returns

By:    Updated: March 30,2017

If you have outstanding tax issues with the Internal Revenue Service from two or more years ago (you haven't filed your tax returns, for example), these can and should be settled as soon as possible. Whether the IRS owes you money or you owe the IRS money, postponing the settlement of these issues is only going to hurt you. If you put off the collection of a tax refund, you deprive yourself of the ability to invest that money into something potentially lucrative, and if you wait for too long, you may not be able to collect your refund at all. If you put off the payment of a tax debt, you will likely have to make interest and penalty payments on top of your original tax debt. The bottom line is that you should file your past due tax returns right away. However, before filing tax returns for previous years, be sure to take the following considerations into account.

Substitute Returns

When taxpayers do not submit tax returns, the IRS files substitute returns for them. These substitute returns only take into account the information that the IRS already has (such as your W-2 information), which usually translates into a higher tax liability for you as they do not account for all of the deductions and exemptions you could otherwise have claimed. Therefore, it is important that you file your past due returns if you want to avoid having to pay a larger tax bill than is necessary.

Elapsed Time

If the IRS owes you money, you do not have an unlimited amount of time to collect that money. According to the IRS website, to collect a tax refund, you must file your tax return “within three years of the original due date of the return, or two years from the time you paid your tax.” If this point is approaching, you should consider speeding things up and getting the filing process completed. Otherwise, you could miss out on getting your tax refund.


Just as elapsed time affects your ability to collect a tax refund, it also affects the IRS's ability to tax you. Generally speaking, the IRS has 10 years in which to instigate collections actions against you for unpaid taxes. If the IRS does take action against you, it can garnish your wages, raid your bank accounts or place a tax lien on your property. It may even take criminal action against you if it finds that you maliciously evaded paying your taxes. However, if 10 years have already passed and the IRS has not recorded or reported any outstanding tax debts, it usually cannot do so for the year in question. However, you still are legally required to file a return for all years in which you have income that exceeds a certain amount. (This amount varies based on the year and on your personal circumstances.)

Income Documentation

To prepare your back tax return, you need the documentation associated with verifying your income for that year. This means you need to get your hands on any applicable W-2 or 1099 forms. If you do not have them, you can request the information associated with these forms from the IRS. (The IRS does not keep actual copies of the documents, but it does keep the information.) To get W-2 and 1099 information for a prior year, fill out the IRS's Form 4506-T and submit it. The IRS will then send you a transcript of taxable income reported for the year in question. This information is important in that it forms the basis of your tax return.


The forms you must fill out to file a tax return are year-specific. They usually have the year written in bold print on the top of the page. When you file your tax return for a prior year, you cannot use forms for this year. You have to use forms from the year in question. To acquire these forms, go to the IRS website or visit the nearest IRS office.

Instructions And Programs

If you are preparing and filing your back tax return yourself, you probably need to use written instructions or a software program created by tax professionals. However, in using such instructions or programs, make sure that they apply to the year in question. The U.S. federal tax code is very complex, and changes occur every year. Using information from a different year can significantly change the tax return balance.

Deductions, Exemptions And Credits

One thing that makes it very important to follow detailed and accurate instructions when preparing your back tax return is the matter of deductions, exemptions and credits. You may not qualify for any such tax breaks for your current tax year. However, the tax year in question may have had different regulations or your personal situation from that year may have qualified you for tax breaks that you do not qualify for anymore. These tax breaks are still applicable for your back tax return, and you should take full advantage of them. They can make an enormous difference when it comes to calculating what you owe the IRS. For this reason, paying $50 or $60 for a legitimate computer program that handles multiple tax years can pay off a thousand fold.

Hiring A Professional

While computer programs for managing tax returns are often very useful, for those individuals with particularly complex finances or particularly large tax problems, the best thing may be to hire a professional. Unlike a computer program, a tax professional can listen to you and look at your particular circumstances. Such professionals may also be well adept at carrying out communications with the IRS – which may be particularly advantageous for those who have significant past-due tax debts.

Notices And Payment

Upon filing your back tax return, be prepared to receive notices from the IRS regarding any outstanding tax debts you may have. The debts listed may include the original tax debt, penalties and monthly interest. Follow the instructions on these notices to make your payments. Try to pay as much as you can to bring down your tax debt. Failure to do so will result in high amounts of recurring monthly interest and unpleasant collections activities. In certain cases, you may be able to qualify for an installment plan to repay your debt. To apply for an installment plan agreement, upon receiving notice of your tax debts, complete IRS Form 9465 and submit it to the IRS.


The bottom line is that you should submit your tax returns on time every year. However, if you do not file your taxes for one or more years, you should submit tax returns for those years as soon as possible. This will help to limit the amount of penalties and interest charges you will have to pay.

More in Finance & Business
New on Valinv
Related Articles
Sponsored Links