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Consumer Insite

June 27, 2024

Haven’t Done Your Taxes in Years? Here’s How to Get Caught Up

Getting caught up on your taxes can seem daunting. We can help you know how to prepare and what to expect, so you can get back on track.

Advertiser Disclosure: Our first priority is to provide valuable information to help our readers gain insight into financial topics. Although we receive compensation from some of the brands listed on our site, we only highlight companies we believe can benefit our readers and their financial situations.

Life happens, and sometimes, essential tasks like filing taxes fall through the cracks. Whether you’ve missed one year or several, the thought of getting caught up on your taxes can feel overwhelming. 

 You might be worried about penalties, interest, or even potential legal consequences. However, it’s important to know that you’re not alone and that many people find themselves in a similar situation. The good news is that with a clear plan and a bit of effort, you can get back on track and alleviate the stress that comes with unfiled taxes.

Understanding the process and taking it step by step can make a daunting task manageable. This guide will help you navigate the complexities of catching up on your taxes, from gathering your financial records to filing your returns and addressing any penalties or interest. Whether you choose to handle the process on your own or seek help from a tax professional, the key is to take action. Here’s how you can start getting caught up on your taxes and regain control of your financial situation.

1. Assess Your Situation

The first step to getting caught up on your taxes is to thoroughly assess your situation. Begin by identifying which years you haven’t filed and gathering all necessary documentation. This includes income documents like W-2s, 1099s, and any other relevant financial records such as bank statements, mortgage interest statements, and receipts for deductible expenses. 

If you’re missing any documents, you can request copies from employers or financial institutions, and the IRS can provide transcripts of your wage and income information. Properly organizing these documents by year will make the filing process much smoother and ensure that you don’t miss any important information.

In addition to gathering documents, it’s essential to understand your current financial situation. Evaluate your ability to pay any back taxes you may owe, and consider setting aside funds or exploring payment options in advance if you suspect you’ll owe a significant amount. Understanding the potential penalties and interest that have accrued on your unpaid taxes is also important. 

The IRS imposes penalties for both failing to file and failing to pay on time, which can add up quickly. By assessing your financial standing and being aware of possible penalties, you can plan more effectively and take the necessary steps to resolve your tax delinquency with confidence. If your situation is particularly complex or overwhelming, consulting a tax professional can provide valuable guidance and ensure you take advantage of all possible deductions and credits.

2. Get Your Forms in Order

For each year you haven’t filed, you’ll need the appropriate tax forms. The IRS provides prior-year forms and instructions on their website. Download the forms for each missed year, or consider using tax software that offers support for past years.

3. Organize Your Financial Records

Organizing your financial records is the next step in getting caught up on your taxes, as it ensures a smooth and accurate filing process. Begin by gathering all necessary documents for each year you’ve missed, such as—but not limited to:

  • W-2s
  • 1099s
  • Bank statements
  • Mortgage interest statements
  • Medical expense receipts
  • Records of charitable donations
  • Records of student loan interest payments

Create separate folders—either physical or digital—for each tax year to keep everything neatly sorted. Within each folder, categorize documents into income, deductions, and credits to streamline the filing process. If any documents are missing, contact your employer, financial institutions, or the IRS to request copies. Additionally, consider using spreadsheet software to list out all your income sources, deductible expenses, and potential credits for each year.

This detailed organization will help you or your tax professional quickly and accurately complete your returns, ensuring that no critical information is overlooked. Proper organization also makes it easier to identify any patterns or discrepancies in your financial records, allowing you to address any issues promptly. 

Taking the time to thoroughly organize your financial records not only simplifies the filing process but also provides peace of mind, knowing that you have a clear and comprehensive understanding of your financial history.

4. File Your Missing Returns

Filing your missing tax returns is critical. The IRS requires that you file the last six years of tax returns to be considered in good standing. You can file the returns yourself or hire a tax professional to help you through the process. Tax professionals can provide valuable guidance, especially if your situation is complex.

Hiring a Tax Professional

If you’re dealing with multiple years of unfiled taxes, it might be wise to consult a Certified Public Accountant (CPA) or an Enrolled Agent (EA). These professionals can help you navigate the complexities of tax laws, ensure you maximize any deductions or credits, and communicate with the IRS on your behalf.

5. Seek Penalty Relief

In some cases, the IRS may waive penalties if you have a valid reason for not filing on time, such as a natural disaster, serious illness, or other circumstances beyond your control. You can request penalty abatement by providing a detailed explanation and any supporting documentation when you file your late returns.

6. Set Up a Payment Plan

If you owe taxes and can’t pay the full amount immediately, the IRS offers payment plans. You can apply for a short-term payment plan (120 days or less) or a long-term installment agreement. This can help you manage your debt without the stress of having to pay a lump sum.

Another option is to work with a tax debt relief company. They are professionals that work directly with the IRS on your behalf to set up payment plans and possibly reduce the amount that you owe. Most tax debt companies have a minimum debt amount required to be able to work with you. Do your research to find out if you qualify before committing to a company to help you resolve your tax debt.

Final Thoughts

Getting caught up on your taxes can seem daunting, but by taking it step by step, you can regain control of your financial situation. Assess your situation, get organized, file your returns, understand the consequences, seek professional help if needed, and stay current moving forward. Taking these steps will not only help you avoid penalties but also provide peace of mind knowing you’re in good standing with the IRS. For more guidance, consider consulting with a financial professional or utilizing the resources at Consumer Insite.

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        Disclosure

        Our first priority is to provide valuable information to help our readers gain insight into financial topics. Although we receive compensation from some of the brands listed on our site, we only highlight companies we believe can benefit our readers and their financial situations. Consumer Insite has partnered with CardRatings for our coverage of credit card products. Consumer Insite and CardRatings may receive a commission from card issuers.

        Advertiser Disclosure

        Our first priority is to provide valuable information to help our readers gain insight into financial topics. Although we receive compensation from some of the brands listed on our site, we only highlight companies we believe can benefit our readers and their financial situations. Consumer Insite has partnered with CardRatings for our coverage of credit card products. Consumer Insite and CardRatings may receive a commission from card issuers.

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        Disclosure

        Our first priority is to provide valuable information to help our readers gain insight into financial topics. Although we receive compensation from some of the brands listed on our site, we only highlight companies we believe can benefit our readers and their financial situations.

        Advertiser Disclosure

        Our first priority is to provide valuable information to help our readers gain insight into financial topics. Although we receive compensation from some of the brands listed on our site, we only highlight companies we believe can benefit our readers and their financial situations.