Delinquent Tax Return Help

Being tax compliant is the best thing you can ever do to avoid trouble with the IRS. It is a federal tax mandate meant to be obeyed by every tax payer to help the government raise revenue for its daily operations.

Even with that being the case, many still end up failing to file their returns for various reasons. Some end up not doing so for years!

In 2020 alone, delinquent taxes in America hit a whooping $114 Billion. And the numbers keep rising!

The real question now remains, what could have led to such insane numbers? 

Let’sfind out.

Why do people have unfiled tax returns?

People end up not filing their tax returns for a couple of reasons. Here are some of them:

• Lack of sufficient data to help in filing returns.
• They may have gone through a major pandemic or a family emergency that took much of their time, causing them not to file.
• They may be overwhelmed because they haven’t filed their returns for a long time.
• They may be owing more than they can pay.

Whatever your reason or situation, you should get cleared by the IRS as soon as possible.

Reasons to file for unfiled tax returns

Filing unfiled returns can be a lengthy process. For that reason, you may be scared to do it because you don’t know where to start. 

But if you are to secure a peaceful future in which the IRS is not following you, you should file your returns now. Here are some of the reasons why you should:

• You get to limit interest charges– Filing your returns late can attract significant charges. Therefore, it is better to file any unfiled returns now before it is too late.

• You get to avoid late payment penalties– On top of interest charges, delaying filing your returns can attract late payment penalties, which, if you are not careful, could make it harder for you to get cleared.

• It’s easier to claim a refund– Filing your delinquent returns makes it easier to claim your refund up to three years from your due date.

• It makes obtaining loans easy– Many financial institutions demand a good credit score before you can qualify for loans. Without it, it may be impossible to obtain the loan you need.

• It helps you protect your social security privileges– If you are an income earner in the US, filing your taxes notifies the Social Security Administration of the income you earn, enabling you to acquire social security and other privileges.

• It helps you avoid substitute returns– When you fail to pay your returns, the IRS may do it on your behalf, which in many cases, they do without considering any exemptions or deductions you were meant to receive. Thus, you may be forced to pay higher taxes than you were meant to pay.

What if you owe more than you can pay?

Sure, it is possible not to have all the amount to clear your pending taxes. In such situations, you could request an extension of 60-120 days to settle your account.

If this time is still not enough for you, you can request an installment agreement or check to see whether you qualify for an offer in compromise.

Consequences of failing to clear delinquent tax returns

If you fail to clear your delinquent tax returns, the IRS won’t rest until you clear your issues. And honestly, the longer you take, the harder it gets for you.

Failing to clear your delinquent returns gives the IRS the power to assess a failure-to-file penalty, usually 5% of the tax owed. Further delays could even force them to issue a substitute return.

If you still don’t file your pending tax returns, the IRS may be forced to impose other tough measures, such as issuing tax liens, seizure of your bank accounts, or even seizure of your assets.

Steps to help you deal with unfiled tax returns

• Get the tax forms from all the years you haven’t filed for – The best way to start is by getting the tax forms from all the years you haven’t filed for. Make sure you get the right ones to avoid complicating the whole process. You can confirm with the IRS if you’re not sure.

• Ensure you have access to your income info– If you don’t have access to the W2 or 1099 forms for the years you didn’t file, you can request them by filling out the 4506-T form and Request for Transcript of Tax Return by ticking box 8.

• Check your business records– Ensure you know your income, profits, and expenses for all the years you haven’t filed for.

• Gather any information related to your deductions and credits– If you have any deductions, credits, or exemptions, it is necessary you get all the information about them. If you have credits to claim, you are also required to get all the information regarding state and local taxes, student loan payments, childcare expenses, etc. 

• Prepare to request penalty abatement– You are safe if this is your first time clearing an unfiled return. First-time offenders can waive penalties imposed on them, making it easy to clear. However, it could be challenging to request to be waived if you haven’t filed your taxes for years.

• Plan to take care of your tax liability– Truth be told, planning is the only way to clear your pending tax liabilities faster. Depending on your situation, you could make monthly payments, settle your returns for less than the amount you were supposed to, or even pay the whole amount in full.

Conclusion

Delinquent tax returns can be a major setback to progress for you if you don’t clear them on time. Even worse, they can be a nightmare if you take long to clear them. 

If you want to secure a peaceful future without having to deal with complex IRS procedures, we are here to help. Get in touch with us to get your issues sorted out today.