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How to File Back Taxes

How to File Back Taxes

Failure to comply with the tax declaration deadline or non-payment of the entire tax bill can have serious consequences. The Internal Revenue Service (IRS) recommends filing unpaid tax returns as soon as possible to limit penalties and interest to the amount owed.

What are IRS Back Taxes?

Back taxes refer to an outstanding state or federal tax debt for a previous year. Federal income tax returns generally expire on April 15 of each year. You can request an extension of the tax return, which gives you an additional six months to file your return. However, even if the extension is approved, you will still have to pay your tax by the required due date.

How to file back taxes

If you owe taxes in return, you must file a response with the IRS. The process is similar to filing a tax return on time, but a few things to keep in mind.

To get started, you will need to find your tax forms and other financial documents. An overdue tax return requires the same information as a regular tax return. Make sure you have the W-2 and 1099 forms received during the fiscal year. You also want to collect the receipts needed to claim tax deductions or credits.

If you don't have all the documents or if you are not sure if you have them, you can request the transcript of your tax return from the IRS. You can choose to receive the transcript by mail or electronically. Transcripts are usually only available for the current fiscal year and for each of the last three fiscal years, but taxpayers can request a transcript from a previous fiscal year by completing Form 4506-T.

Tax forms are frequently updated due to changes in legislation. When filing your tax return, be sure to use the original tax forms and instructions for the year in which you filed your claim. The IRS has a database of forms from previous years on its website. 

If you need help filling out the form, you can use tax preparation software or hire a tax professional.

However, unlike a normal tax return, it is not possible to file an overdue tax return electronically. You must send the return and outstanding payment to the mailing address listed on Form 1040 or by late notice from the IRS if you received one.

Be sure to include all taxes owed in previous years with your payment. The outstanding balance will continue to accumulate interest until it is paid in full.

What happens when I don't file back taxes?

If you have a tax refund, you must file an unpaid tax return as soon as possible. If you don't show up or pay your taxes in full by the due date, the IRS will start charging fines for the amount owed. Types of sanctions include:

  • Failure to file penalty - If you miss the filing deadline and have not filed for an extension, Uncle Sam imposes a penalty of 5% of the amount of unpaid taxes. The IRS will continue to charge you an additional 5% each month for up to five months. Additional late fees also apply for returns filed more than 60 days after the expiration date. If your return is due in 2021, your penalty will be equal to the total amount of your unpaid tax bill or $435, whichever is less.

  • Failure to pay penalty: If you don't pay the taxes on time, the IRS will charge you a 0.5% penalty for each month you are late. The maximum failure to file is 25%; however, interest will continue to accrue until the tax debt is fully paid.

There is also a penalty for paying less estimated taxes, which normally expires on April 15, June 15, September 15, and January 15. For the fourth quarter of the 2021 fiscal year, the penalty for non-payment is 3%.

In addition to penalties and interest, other inconveniences can arise from not registering and paying taxes. For example:

  • It may be subject to additional penalties or criminal charges.

  • The IRS may file a substitute return on your behalf, which may not include all of the deductions and credits you are entitled to.

  • The IRS may initiate charges, which may include charges on your bank account or check or federal tax on your property.

  • The Internal Revenue Service will not issue refunds to taxpayers who are past due.

  • You may have difficulty obtaining a mortgage, federal financial assistance, or other loans.

  • You will not receive Social Security benefit credits for self-employment income.

What if I can't pay my taxes?

The Internal Revenue Service offers several options to help taxpayers who cannot pay their tax obligations. However, if you have to pay your taxes late, it is your responsibility to contact the Internal Revenue Service for assistance. If you do not do anything about it, the IRS will continue to charge interest on the unpaid taxes.

Here are options for people who can't pay taxes:

  • Propose an OIC (Offer in Compromise)

  • Request for an installment agreement

  • Request for penalty abatement from the IRS

  • Request for reasonable cause assistance

  • Request to delay collections

The Taxpayer Relief Initiative (TRI) introduced revised collection procedures to help taxpayers who had to pay taxes and were facing serious financial hardship due to COVID-19.

In some cases, you may need to get professional help to prepare an offer in compromise (OIC) or other solution for your unpaid tax obligations. Try to avoid tax settlement companies that claim to offer a simple solution to reducing your debt. 

Taxpayers in such situations should contact a qualified tax lawyer who can assess their situation and recommend a solution. The key is to get professional help as soon as possible, preferably before you receive notification from the IRS, to limit penalties and accrued interest. The IRS has a list of approved federal tax preparers, which includes lawyers. It also offers clinics for low-income taxpayers to help with this situation.


  • Taxpayers who cannot pay their taxes can request a payment plan or request a guaranteed offer from the IRS.

  • Taxpayers who owe taxes in return should file an overdue tax return as soon as possible.

  • The IRS charges interest and penalties for overdue taxes and may take severe enforcement action against non-paying taxpayers.



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