The Length of Time to File Back Taxes

Fraser Sherman

Filing your taxes late is much better than not filing at all. Although there are legal time limits on things like refunds that kick in if you postpone filing long enough, the obligation to pay never expires.

This article was originally published by Demand Media for Zacks.com.

Filing your taxes late is much better than not filing at all. You can't get a tax refund without filing. If you're self-employed, income you don't report can't earn credits toward Social Security benefits.

There are legal time limits that kick in if you postpone filing long enough, but the obligation to pay never expires.

Refunds

If you have a refund due this year, you have three years after next April 15 to file your return and get money back. Any longer than three years and your right to your refund expires. Three years is also the limit on qualifying for the Earned Income Tax Credit and similar tax breaks. If it's been more than three years, you can still file back taxes, but you won't get any money back.

Tax penalties

If you owe the government and don't file, the IRS can hit you with interest on the unpaid tax, as well as a late-filing penalty. Unlike credit cards, the interest is finite: it maxes out after a few months at 25% of what you owe.

The IRS calculates your tax using 1040s, 1099s and other paperwork, which may not record all your deductions or tax breaks. By filing late you can give the government the correct information and lower your bill.

Statute of limitations

The IRS normally has three years to audit your tax return, or six if you've under-reported income by 25%. However, the statute of limitations only kicks in after you file — so if you never file this year's tax return the IRS always has the option to audit it. The sooner you get around to filing, the sooner the limit expires. Then you can shred most of your tax returns and forget about this year's tax bill.

No money

If you can't pay your tax bill yet, filing a return is still worthwhile since it stops the IRS from applying a late-filing penalty. You may still owe interest on the unpaid bill, but you can work out a deal with the IRS to pay in installments. That reduces your nonpayment penalty and keeps the IRS from levying your bank account or applying a lien on your house.

Read more:

Frequently Asked Questions For Past Due Return Filers - IRS

What Will Happen If You Don't File Your Past Due Return or Contact the IRS - IRS

IRS Notices and Bills, Penalties and Interest Charges - IRS

Even the IRS Has Time Limits - Forbes

IRS Statute of Limitations -- Is Your Return Safe? - Forbes

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