Can Income Taxes Be Filed From Previous Years?

Late Penalties

The most immediate consequence to not filing a tax return and paying the tax by the deadline is that the IRS will start charging you a penalty right away. Currently, the penalty has two components: 4.5 percent for filing late and one-half percent for paying late. This 5 percent is in addition to the tax you owe on the particular return you don't file and accrues on a monthly basis. The maximum late-filing penalty the IRS can charge you is 22.5 percent if you don't file the return within five months; however, the one-half percent penalty continues to accrue for approximately four years until you pay the tax in full. Therefore, the sooner you file your previous returns, the sooner your penalties stop accruing.

Not only does filing your tax return late cost you money, the statute of limitations never starts to run until you file. Generally, the IRS has three years from the tax return deadline to conduct an audit of your return. When you don't file, the limitations period doesn't begin until the date you actually file. So if you file your previous year's return four years late, then the IRS has another three years to audit you. Therefore, by filing your previous tax returns, you can get the clock running.

Similar to the limitations period for an audit, in most cases, the IRS limits your ability to claim a refund from a previous year to three years. To illustrate, suppose you fail to file your 2010 return on April 18, 2011 even though you are due a refund. If you don't file your 2010 return by April 18, 2014, then you lose that refund. The IRS has no obligation to honor your refund claim when it is past the three-year period. So you may be throwing away money by not filing your previous tax returns.

When you are ready to get all of your past tax returns filed, you must always use the original tax form for that tax year. For example, if you wait until 2013 to file your 2007 tax return, you cannot use the IRS forms that apply to the 2013 tax year. You can access all prior year forms on the IRS website. Remember, since the tax law changes every year, you must also use the original instructions for the previous year when preparing the return.