Today TaxMama® hears from Richard, who wants to come in from the cold. “I was in rough financial shape for several years and have not filed a tax return in three years. How do I go about squaring up with the IRS now that my finances have improved?”
Rita Lewis, EA from Dollars & Sense in CT comes to the rescue. She provides excellent advice.
Something to remember going forward: ALWAYS file your tax returns on time, even when you can’t pay in full. You avoid late filing and non-filing penalties. And, things like installment agreements and being put on non-collectible status are available to you.
For now, file those tax returns as soon as you can, and pay them in full if possible, as soon as you can. If you need help, you should be able to find someone local who’s comfortable with filing prior year tax returns and has the time to work with you during this off-season. If you used a professional preparer in the past, you might want to return to him/her.
Your preparer may have you sign a power of attorney for those years, so s/he can use e-services to download the information the IRS has in the way of W-2s, 1099s of all sorts, as well as withholding you might have.
Pull out your receipts and your calendar to help you reconstruct those years. Organize as much as possible to save yourself accounting fees: sort things into each year, gather check stubs, W-2s, 1099s, bank statements, invoices, receipts, mileage logs, medical records, anything that shows your income and expenses. Pull out your copy of your last tax return filed. Use it to remind yourself of the types of income and deductions you’ve had in the past. Give a copy to your preparer also, if you use one.
Come back here if you have specific questions as you lay out each year’s return to file. And read TaxMama’s additional suggestions, in case you want to gather the information from IRS on your own.
And remember, you can find answers to all kinds of questions about catching up on unfiled years and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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