How Your Back Taxes Are Affected By The Statute of Limitations

When facing trouble with the IRS you may feel that once the IRS has a grip on your taxes you can’t ever break free. However, there are facts and rules that every consumer needs to know about Back Taxes, filing and paying.

The IRS does have rules to follow, and they have statute of limitations on when they audit you. Once you file they have three years to choose if they want to audit you, if you really over-state or understate your income than that three years turns into six years after the file date. You have three years to claim your tax refunds, after that your refunds disappear forever. And the IRS can decide for ten years if they want to collect any taxes due. Even though the IRS follows these rules, it varies from state to state, some adding a year or two.

So what can you do if you have back taxes? First figure out when was the last time you filed, get all the information you need , W-2s, 1099s , and such for all years that you haven’t filed. For specific 1099s and W-2s, simply go to the IRS website and fill out the Form 4506-T and mail it back in. If you don’t have any of the other documents mentioned above than you can simply request the documents from the IRS by going on the website or calling  to have them delivered. Your taxes would have to be done on paper and mailed in, you cannot file electronically. It is important to request and get the forms that are specific to the year you are filing because each year the law, credits, and deductions change.

If you don’t know what your doing, it is best to seek a tax professional for help, or a least read up on the years that you need to file so you don’t make miscalculations on your return. Even downloading and using tax software specific to your year is helpful as well. Once you have researched all the information and receive all the documents and receipts necessary than you can finally prepare your tax returns to determine if you owe any money or are likely to receive a tax return. Remember that the statute of limitations on tax returns though is three years after you were supposed to file, so if you finally file a tax return for anything before 2009 than you are out of luck. However no matter what year you file if you owe back taxes you need to pay them. If you do owe taxes than you are subject to tax penalties and interest. If you don’t have all the money to pay back you go to IRS to fill out a form and set up an installment agreement.

Things to remember, if you didn’t file taxes for a certain year, first determine if you had to file one at all. Secondly if the IRS does request that you file a tax return, the IRS will file one on your behalf, omitting all the deductions and credit. Which can determine if you owe taxes, and if you don’t pay in full or set up an agreement than you are liable for collections. You can however still file a return for the year they filed a return. Make sure when you mail in your tax returns you do so through a certified letter, and make copies of your tax return so that if needed you have proof that you sent in you return to the right IRS office.