By not filing within three years of the due date, you might end up owing even more taxes because you can no longer claim the lucrative tax credits you might have otherwise qualified for. This IRS only allows you to claim refunds and tax credits within three years of the tax return's original due date. Unfortunately, there is a limit on how far back you can file a tax return to claim tax refunds and tax credits. Even so, the IRS can go back more than six years in certain instances. That said, the IRS usually only requires you to file the last six years of tax returns to be considered in good standing. The IRS prefers that you file all back tax returns for years you have not yet filed. By filing a return and paying the associated taxes, you report your income so that you may qualify for Social Security retirement and disability benefits when you need them. Self-employed individuals have to pay Social Security taxes through their estimated tax payments and individual income tax returns. Pay Social Security taxes to qualify for benefits Filing your tax returns before you apply for a loan helps the process go smoother. Have tax returns for loan applicationsĬertain types of loans, such as mortgages and business loans, may require you to have documentation of your income as part of the approval process. Unlike penalties, interest does not stop accruing after a particular period goes by. The IRS also charges interest on overdue taxes.
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These fees will accrue until your balance is paid in full or the penalty reaches 25%, whichever comes first. If you do file on time, but you can't pay what you owe in full by the due date, you'll be fined an additional 0.5% of the amount of the tax not paid on time for each month or part of a month you are late. The IRS assesses another penalty for a failure to pay your taxes owed. If you don't pay your balance, you may have to pay an additional 5% of the unpaid tax you were required to report for each month your tax return is late, up to five months. Stop late filing and payment penalties and interestįiling a tax return on time is key to avoid penalties, even if you can't pay the balance you owe. In these cases, filing a tax return could result in a tax refund that puts more money in your bank account. While many have federal income taxes withheld from their paychecks, sometimes too much money is withheld. One practical reason to file a back tax return is to see if the IRS owes you a tax refund. Why you should file back taxesįiling back tax returns you haven't completed could help you do one of the following: 1.
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Learn more about why one may choose to file back taxes and how to start this process. Should you file back taxes? It may not be too late to file a previous year's tax return to pay what you owe or claim your refund.
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