Tax season arrives annually, regardless of your preparedness. Most individuals are accustomed to submitting their tax returns on time. You may be among the numerous individuals who have delayed filing their tax returns till now. Having never filed returns before, the prospect of filing two or more forms was intimidating.
You were already several years behind and had no idea how to catch up. You had numerous Internal Revenue Service letters and notices on your desk, but you were too busy to read them. Today is the time to try something related to “how to handle unfiled tax returns“.
Consider the following two steps:
1) Do not attempt to avoid it
There are no immediate intentions to abolish the IRS. In the long term, procrastination is detrimental. The longer you wait to address this issue, the more you will be charged interest and penalties. It’s in your best interest to work things out on your own before the IRS starts taking collection actions or auditing you.
In extremely rare instances, individuals who do not file their taxes could face criminal penalties from the IRS. In addition, they can help you file your tax return, determine how much you owe, and receive your refund. When filing an “SFR” or “substitute for return” with the IRS, you may not receive all of the tax deductions you would if you submitted the return yourself. This could result in a substantial increase in your tax burden.
If you believe you are entitled to a refund from the previous year, you have three years to register a claim. If you do not file a tax return and owe money, the assessment period will not begin until the entire amount is paid. Even though the IRS usually asks for the last six years of tax returns from people who haven’t filed, the law gives the IRS an unlimited amount of time to figure out how much tax is owed and collect it from people who haven’t filed.
2) Compile all of your information
Examine your old files and drawers for anything that could assist you with your tax return. To ensure everyone’s safety, involve as many individuals as feasible. You can always eliminate some of the information in the future. If you don’t have copies of your previous records, contact your bank or credit card company.
You can also use your Social Security number to obtain copies of information sent to the IRS by other parties, such as employers, investment companies, mortgage lenders, etc. Even though it is preferable to set up all data at the same time as the transaction, it is possible to set up some data again if necessary. Include documentation for major acquisitions such as a home, vehicle, or investment property.
Final Overview
After gathering all the data, arrange it by year and then by month. Using data from a couple of your monthly tax statements for a given tax year, you can occasionally review your tax processes. If you have many records, create files for each year or monthly folders inside yearly folders.
Now is the time to open and deal with any IRS letter that has been sitting around for a while. Ensure that you do not miss any vital information or an opportunity to respond. These notifications must be opened, sorted by date, and filed in the appropriate location.