American tax law is complicated and intricate, so it’s no wonder many people make mistakes when filing their taxes or fail to file altogether. Unfortunately, not completing your return can have negative consequences and lose you money, whether you were supposed to file or not. In addition to avoiding penalties, you can also learn more about your financial situation and potentially receive a refund from the IRS when you file old tax returns.
Many people find taxes daunting, so they can benefit from enlisting the help of a tax resolution specialist. This kind of professional works with people in a variety of situations, so they will know how to best help you out. Today, let’s have a look at why old returns should always be filed and how you can get started on this task.
Why Should You File Old Tax Returns?
There are many reasons why people fail to file their tax returns. A difficult family situation or a change of circumstances such as divorce or bereavement can make it challenging to deal with the paperwork. What’s more, some people might think that there is no point in filing since they are not required to do so. No matter if you were supposed to file or not, doing so can be a great idea because you could avoid penalties and receive refunds from the IRS.
It’s Illegal and You Could Face Penalties
In many cases, not filing your return is illegal, particularly if you owe the government any money. For this reason, you will have to pay a failure-to-file penalty if you don’t do so by April 15. This is generally higher than the penalty you pay if you simply cannot pay your taxes, so it’s worth filing even if you know that you will have trouble settling your bill. Always file your return and pay as much as you can, so you will owe the smallest amount of interest possible.
The later you file your return, the larger the penalty you will pay, so try to file as soon as you notice that you are running late. If you’re worried about how to complete your return, you can get in touch with a tax resolution specialist. In addition to helping you fill out all the forms, they can check whether you might be exempt from paying your penalty due to extenuating circumstances that caused you to file late.
You Will Get Clarity About Your Situation
If you were required to file in a certain year but you didn’t, you might not know exactly how much you owe. Additionally, you’ll be unclear on whether the IRS needs to pay you a refund. By filing now, you can get clarity about your situation and find out more about the state of your personal finances. Once you’re aware of the situation, you’ll be able to make better decisions and get more accurate advice from your tax specialist.
The Government Could Owe You Money
Some people don’t have to file a tax return, for example, if they don’t earn enough for it to be a requirement. However, it can still be a good idea in many cases because the government might owe them money. If you are owed a refund, there won’t be a penalty for failure to file, but you also won’t receive the money unless you take action.
People with a lower income who have had federal taxes withdrawn by their employer should always file a return because these might need to be paid back to them. You shouldn’t delay getting the process started, as there is a three-year time limit on any refunds. Failing to file within this time usually means that the IRS can no longer return your money to you or apply overpayments to other years.
You Could Benefit from Working Tax Credit
People with low to moderate incomes can get a tax break through the Working Tax Credit, also called Earned Income Tax Credit, particularly if they have a family to sustain and paying the regular amount of tax would make it hard for them to do so. People with a disability or those who have served in the military might also be able to benefit from this type of help. However, if you fail to file, you are likely to lose your right to EITC.
How to File Your Past Tax Returns
Now that you know why it’s so important to file your old tax returns, you might wonder where to get started. If you’re confused by the process, you believe that you might face some penalties, or you’re not sure all of the paperwork is available, you’ll need the help of a professional. By working with a tax specialists and making an effort to gather all your documents on time, you can make sure that you’re receiving all the refunds and credits you’re owed.
Contact a Highly Competent Tax Resolution Specialist
The best way to get started is to speak to a specialist who knows all the federal tax rules and regulations. Such a professional will be able to tell you exactly what you have to do to file your return correctly and gain the maximum benefit from it. If you failed to file illegally and owe the government money, your tax resolution specialist can negotiate with the IRS to minimize your penalty or even reduce the amount of tax you have to pay.
On the other hand, if you are due a refund or a tax credit, your tax professional can let you know about this and help you to obtain this quickly. Here at Geaux Tax Resolution, we believe that nobody should suffer hardship due to taxes, and we work closely with the IRS to offer everyone a fair and advantageous solution for their tax issues. When you decide to hire us, you can be sure that you are filing your return correctly.
Gather All Relevant Documents
Your specialist won’t be able to help you unless you provide all the necessary documents in a timely manner. Remember that there is a three-year time limit when it comes to receiving your tax refund, so you’ll need to get your old returns filed as quickly as possible.
Sometimes, a form, such as W-2, 1098, 1099, or 5498 might be missing, and you’ll have to request it from your bank, employer, or payer. This can take several weeks or even months, depending on how responsive the other party is. If they don’t respond at all or are not able to provide the form you need, your tax specialist can help you to obtain a “Wage and Income Transcript”.
If you haven’t filed one or more of your old tax returns, you should do so as soon as possible because you might be able to avoid penalties or even receive a refund or tax credit from the government. There is a three-year time limit on tax refunds, so filing quickly is essential. To do so and to make sure that you don’t make a mistake on your return, you should enlist the help of a professional.
Get in touch with us at Geaux Tax Resolution in Lafayette, LA to begin working with one of our tax resolution specialists. Our firm is led by a former IRS employee, so we have both the knowledge and the contacts necessary to help you achieve the best outcome possible.