Getting on the IRS’ bad side is never a good idea. But whether it’s due to a hectic work schedule, personal illness, or family emergencies, millions of Americans miss their Tax Day deadlines each year, drawing the IRS’s attention — and a little bit of financial ire. Maybe you misplaced your return, lost track of time, or a million other things got in the way. We’re not here to judge, but we are here to help. Learn more about how to file back taxes without records and what this process typically looks like.
Help, I Didn’t File My Taxes!
First, don’t panic. You’re far from the first to miss a deadline on your taxes, and you’re not going to be the last. The IRS has systems in place for this sort of thing, and there are still ways for you to figure it all out. Next, take immediate action. Too many taxpayers realize they’re late on their taxes, freak out, and decide not to file them. If you need to file taxes but choose not to, the IRS has several means for bringing you to the table. Actions include, but are not limited to:
- Assessing penalties, fines, and interest;
- Enforcing tax liens;
- Or more severe measures, for evading any taxes you might owe.
Generally speaking, the more proactive you are, the better. Not filing a return when you should and need to is worse than filing a late return and can result in penalties and fines from the IRS.
What Are the Penalties for Late Filing?
Late tax returns offer some of the heftier tax penalties. The IRS will take what you owe in taxes as a principal and add five percent every month for five months for a total fine of 25 percent. Failure to file, as the penalty is known, is one of the more common penalties that the IRS may levy against taxpayers.
If you’re behind on your tax payments and have missed your deadline for payment, the IRS will additionally levy a failure to pay penalty. This is rolled into the 5 percent penalty for the first five months — but after that, you will continue to accrue a penalty of 0.5 percent for another 45 months, for a total penalty of about 47.5 percent of your due taxes, plus interest. Let’s not let it get to that!
Do I Need to File a Tax Return?
Not everyone is required to file an income tax return each year. Generally, if your total income for the year doesn't exceed certain thresholds, then you don't need to file a federal tax return. The amount of income that you can earn before you are required to file a tax return also depends on the type of income, your age, and your filing status.
Depending on your filing status, you can avoid filing any income taxes if you don’t earn enough to qualify for an income tax return. The minimum can range wildly, so check with an accountant or a tax professional if your income qualifies you for a tax return.
Most U.S. citizens – and permanent residents who work in the United States – need to file a tax return if they make more than a certain amount for the year. You may want to file even if you make less than that amount, because you may get money back if you file. This could apply to you if you:
Here's how to figure out if you should file a tax return this year:
- Look at your income to see if you made the minimum required to file a tax return.
- Decide which filing status is best for you (you may be required to file a tax return depending on your filing status, income, and age).
- If you're retired, find out if your retirement income is taxable.
- Find out if you qualify to claim certain credits and deductions to lower the amount of tax you owe.
- Use the IRS Interactive Tax Assistant to determine your filing requirement.
It's important to note that figures may change from year to year due to inflation. If you earned more than the stated amounts, and don’t qualify for a higher exemption due to disability, age, or filing status, then your next step would be to determine what you owe the IRS. Taxes are paid over the year through tax withholding (if you’re employed) or estimated payments (if you’re self-employed).
If you made your payments to the IRS one way or the other, odds are you either paid too much (which means you’re due for a tax refund) or you paid too little (which means you owe the IRS and need to send them the remaining money alongside your tax return). Failing to file and owing the IRS results in growing debt. But if you’ve overpaid, the additional taxes can cover your penalties – provided you file now. The sooner you get back on the IRS’ good side, the faster this can be over.
You don’t need to go through complicated paperwork – use tax return software, processing tools, or a service of choice and file as soon as possible. Contact a professional tax return preparation service for expedient and quality returns if possible. If your return was delayed due to extant circumstances, you might be eligible for special relief and penalty abatement. For example, living in a disaster area (such as a hurricane-affected county) may give you extra leeway with the IRS for filing your back taxes. Exploring tax relief options for back taxes can significantly ease your financial burden. Many taxpayers are unaware of the various programs available that might help them settle their debts with the IRS more affordably. By consulting with a tax professional, you can uncover these opportunities tailored specifically to your circumstances.
What Will the IRS Do Next?
If you’re not rectifying the problem, the IRS will send you a notice informing you of your impending tax debt and lack of tax return. At this point, the IRS may file a substitute return for you. This return will be superseded by any return you provide, but in the interim, the IRS will rely on a template to determine your due taxes for the next year, which isn’t always going to paint a flattering picture of your finances. Your best bet is to file your return as soon as possible.
What If I Don’t Have My Records?
If you don’t have the necessary information to file another tax return and can’t get wage and income transcripts from your employer, your next best bet is to contact the IRS and request a transcript of your records that way. This may take some time, sadly, so it’s not the preferred solution – but when all else fails, this is a guaranteed way to retrieve your existing tax information, provided you’ve submitted at least one tax return in the past.
In the interim, gather all the information you can about your finances – dig through digital receipts and wire transfers, track your bank’s incoming and outgoing payments, and try to establish gross income and losses, especially if you’re self-employed. Next, get in touch with a qualified accountant or tax preparation professional. This is especially important if you have more than one year’s worth of back taxes.
What If I Can’t Afford to Pay Back Taxes?
If you’ve missed quite a few deadlines, chances are that your debt has racked up past what you might be able to pay off with a lump sum payment reasonably. Determine what you owe by calling the IRS or checking your tax account online, and set up a payment plan as soon as possible.
If you owe less than $25,000, you may still be eligible for a streamlined online payment plan – start making payments. This can reduce your penalties and help you alleviate your debt sooner. If you cannot afford to make monthly payments as calculated by the IRS, consider talking to a tax professional about alternatives, such as an offer in compromise.
The Final Takeaway
Falling behind on your taxes can be a scary prospect but it doesn't have to be. Lacking the necessary records can present a temporary roadblock, but there's a very strong chance that the IRS has backups. For records where the IRS does not have copies, start with your own financial records then organize them. To learn more about how to file back taxes and what this process typically looks like, or if you need help getting all of your records in order, Rush Tax Resolution can help. Contact us to learn about our resolution process.