Filing tax returns from previous years is necessary to avoid penalties, interest, and in some cases, legal repercussions. However, while going back in time and collecting the necessary documentation can be time-consuming, staying current with your taxes can show financial stability and a record of employment. For immigrants looking to adjust their status it can also help them by showing good moral character in future proceedings.
Here is what you need to know if you haven’t filed taxes for previous years.
These informational materials are not intended and should not be taken as tax, financial, or legal advice. This list provided by the IRS has trusted partners that can help you file your tax return for free.
How many years of back taxes do I need to file?
Tax returns from previous years, commonly known as back taxes, can be identified by requesting an IRS tax account transcript.
A transcript summarizes your records from the IRS, listing the tax return information for each year, and showing which years you have filed and which years you have missed. The transcript can be requested online by creating an account with the IRS and providing your personal information, such as your Social Security number (SSN).
Those who possess Individual Taxpayer Identification Numbers (ITIN) can only request a transcript via mail, by entering their ITIN, date of birth, and the address of the most recent tax return.
To request a transcript visit this link: IRS-get-transcript
Keep in mind that the transcript will show only the years where income or payments were reported. This means people who work in the cash economy will not see records for the years they earned cash. Read our guide on how to report cash income.
Collecting the necessary documentation
Once you have received your transcript and identified the years needed to file, you can begin by collecting the necessary documents to provide the income. This includes:
- W-2s: This form itemizes your total annual wages and the amount of taxes withheld from your paycheck.
- 1099s: Unlike a W-2, which is given to employees, a 1099 records the payments made to independent contractors or to a business. Click here to learn more about it.
- Receipts and financial records: include cash register tapes, deposit information (cash and credit sales), receipt books, invoices and more. See the full list here.
Also Read: How to Report Cash Income in Your Tax Return
Finding the forms to file
After collecting all the necessary documents and determining which years you need to file, find the corresponding form for each year that you have missed. You cannot file one form for all your missed years.
Additionally, the form must match the year for which you are filing. For example, use Form 1040 for 2005 to report wages and earnings from that year.
You can find the corresponding form by visiting the IRS website at: IRS-Prior Year and Instructions
Type “1040” or the form you need on the search menu.
Filing the tax returns
Once you have found the form you need, you will also need to calculate the penalties and interest owed. Unpaid taxes that are not paid by the deadline or are filed late incur late payment fees, which often accrue interest over time. It is highly recommended to seek the assistance of an authorized accountant.
The IRS recommends paying as soon as possible to minimize the cost of accrued penalties and interest of unpaid taxes.
Also Read: How to File Personal Income Tax in New York City
Unfortunately, taxes owed for previous years cannot be e-filed and must be sent via mail. You can still use software to fill out the forms and then print them out.
What if I do not pay back taxes?
Not paying taxes has repercussions, such as tax penalties and fees, for any person working in the United States, including U.S. citizens. Tax debt can also be very detrimental for immigrants who are looking to naturalize. Not paying taxes could disqualify someone from obtaining citizenship for failing to meet the good moral character requirements.
Those undergoing the naturalization process are required to bring the transcript for the last 5 years, if they are not married, and the last 3 years for those who are married to a U.S. citizen.
What if I can’t afford to pay taxes?
Unexpected expenses can be difficult to cover, especially if you owe taxes for multiple years. The IRS offers payment plans that can allow individuals to pay the debt in installments. The terms, fees, duration, and interest will depend on your financial situation. You can learn more about payment plans here.
There is also an “offer in compromise” which could allow individuals, based on their income, ability to pay, expenses and asset equity, to settle for less than the amount owed. Those interested can use the pre-screening tool to see if they qualify.
Can filing my taxes help with my immigration case?
Filing taxes can be beneficial for adjustment of status in the United States, as it can help individuals demonstrate financial stability and compliance with tax laws. Additionally, a tax return can be shown as proof of address, proof of income, and open the door for other tax credits and benefits.
Loan officers also use a tax transcript to check the financial standing, and verify income information of applicants. It can be proof that the applicant is self-sufficient for immigration purposes under the public charge rule.
For assistance, read our guides relating to taxes:
