Unfiled Tax Returns: How Far Should I Go Back?

It’s been long time since you’ve filed your tax returns, so long that you’ve felt somewhat immobilized to come forward and set the record straight.  But, you’ve made the right decision and are looking to get in compliance with tax filing.  So now, how far back to file?  Generally, the IRS wants you to go back and file the last six years and work out a payment option for any balances due.  Click here to read about the six-year enforcement period for delinquent returns: Internal Revenue Manual 1.2.14.1.18

Part of what may have prevented you from filing sooner is that you lack adequate records going back several years.  There are remedies for this, the first being to contact the IRS and obtain your Wage & Income Transcripts for the last six years.  These transcripts will include items filed with your social security number like the following:

  • W-2 for wages
  • 1099-Misc for self-employment income
  • 1099-Int for interest
  • 1099-Div for dividends
  • 1098 for mortgage interest
  • 1099-R for distributions from retirement accounts
  • 1099-SSA for social security benefits

Often times, this will be enough to file returns and you won’t have to go digging through boxes in your basement or making awkward calls to former employers.

Keep in mind, this is the general rule but there are exceptions.  For example, let’s say you last filed eight years ago and have a large balance due that year.  Filing six years would create a one-year gap (year seven).  The IRS would require you to file the seventh year to close the gap and work out a payment option.

Don’t let the amount of unfiled years hold you back from filing.  Filing your last six years of returns and getting back in compliance can be manageable and will leave you feeling relieved when it’s done.  If you have balances due after filing and cannot full pay, you’ll want to look at your options based on the total due and your current income levels.  These options include an Installment Agreement, Offer-In-Compromise, or Currently-Not-Collectible Status.

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