Ultimate Guide to Unfiled Tax Returns

Everything you need to know about unfiled tax returns.

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Do you have unfiled tax returns? Stressed about the consequences, but worried that it’s too late to do anything about it? Every year, approximately 1 million taxpayers don’t file a tax return, so you are not alone. In fact, the IRS estimates about $1 billion in tax return go unclaimed every year by people who don’t file tax returns (source). The good news is the IRS has programs in place to help you get caught up. Plus, professional assistance is available if you need it.

Annual tax refunds awaiting people who have not filed a tax return (source: IRS).

Read on to learn all you need to know about unfiled tax returns, including answers to the following questions:

Let’s get started.

Do you need to file a tax return?

If you haven’t filed your tax return, the first question to answer is whether you actually need to. This depends on your filing status and your gross income for the year.

If your income was equal to or less than the standard deduction amount that applies to your filing status, you do not usually need to file. For example, for the 2018 tax year, you need to file if you made more than the following amount:

 

Filing StatusStandard Deduction
Single$12,000
Married Filing Jointly or Qualifying Widow(er)$24,000
Married Filing Separately$12,000
Head of Household$18,000

If you made more than that, you probably need to file. Want a more definite answer for the past three tax years? Use the IRS’s online interactive tax assistant (ITA).

How long can you go without filing your tax return?

You have until April 15th of the following year to file a tax return. For example, you must file your return for the 2016 tax year by April 15th of 2017. If you know you can’t file in time, you can file an extension using Form 4868. This will extend your due date to October 15th. However, even if you file an extension, you will still be subject to penalties and interest.

If you don’t file on time, the IRS can file a substitute return on your behalf. However, this return usually doesn’t include the credits for deductions and exemptions that you’re entitled to receive. Once filed, you will receive a Notice of Deficiency CP3219N (90-day letter), which proposes the amount you owe. At this point, you have 90 days to respond and file your version of your tax return to get the deductions you deserve. You can also petition the tax court.

If you don’t respond within the given time frame, you will owe the amount due. And if you don’t pay that amount, you’ll be subject to collection efforts from the IRS.

Is there a statute of limitations on unfiled tax returns?

The Internal Revenue Code (IRC) requires that the IRS assesses, funds, credits, and collects taxes within specific time limits, known as the statutes of limitations (SOL). While there is an SOL of 10 years wherein the IRS can assess and collect unpaid taxes, the SOL doesn’t start until a given tax return has been filed. As such, if your tax return is unfiled, the IRS can assess it, no matter how much time has passed.

However, there are some statutes you should know.

If you’re entitled to a refund, you must file your taxes within three years of the due date in order to receive it. This three-year rule also applies to other credits, such as those from overpayments of estimated or withholding taxes. Further, if the IRS wants to pursue tax evasion charges, it has to do so within six years of the unfiled return’s due date.

Can you go to jail for not filing a tax return?

Technically, yes, but it’s unlikely. Federal law mandates that the IRS assesses the payment of taxes. As such, according to Sec. 7201 of the IRS Code, if you’re caught deliberately evading this assessment, you can face fines up to $250,000 and imprisonment for up to five years. However, most taxpayers who fail to file a tax return are not deliberately evading taxes.

How can you get current with the IRS?

To get current with the IRS, you first need to clarify your situation. Take inventory of your past tax years and identify how many returns remain unfiled. If you have more than six years of unfiled returns, you probably only need to file returns for the most recent six years, according to Policy Statement 5-133.

What if you don’t have the information you need to file your tax return?

Can’t file an overdue return because you don’t know your income for that year? Submit form 4506-T to the IRS and check the box on number eight. 4506-T is a “Request for Transcript of Tax Return,” and will provide you with your wage and income information for the requested year. The IRS may be able to provide data for up to 10 years. You can also request transcripts of prior tax returns if needed.

What if you can’t pay what you owe to the IRS?

If you can’t afford to pay what you owe, the IRS has several tax relief options that may be able to help you. They established the Fresh Start Program to help taxpayers get current on their debts. You may be able to set up a series of installment payments to repay your balance over time. Or you may even be able to settle your debt for less than what you owe.

Figuring out which solution is best for you can be confusing. If you need help, consider hiring a tax relief company.

Should you hire a tax relief company?

Tax relief companies help U.S. taxpayers who owe the IRS. They work to settle taxpayer cases with the most beneficial outcome. Their expertise can help you to avoid collection actions, eliminate penalties, reduce your tax bill, and streamline the tax relief process.

While you can represent yourself against the IRS, most people are at a disadvantage because of the complexity of tax law. Hiring a professional to negotiate with the IRS on your behalf ensures that your interests are protected.

The first step is to vet and compare tax relief firms to find the best company for you. Once you choose, you will sign a power of attorney form so the firm can represent you in dealings with the IRS.

You’ll have to give the tax relief company all the details about your tax situation so they can find the right resolution. Once you agree on a plan, they’ll contact the IRS to negotiate, and will handle all the required paperwork. Hiring a tax relief firm takes the stress of dealing with the IRS directly off of your plate.

Ready to get started? Compare industry-leading tax relief companies below.

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