Picture this: it’s a beautiful sunny day, and you’re out and about, enjoying life. You’ve got your sunglasses on, your favorite tunes playing in your headphones and a smile on your face.
Suddenly, your phone receives notifications, and your heart sinks when you see that it’s IRS mail. You haven’t filed your taxes in years and know you’re in trouble.
But don’t fret! You might not have the necessary records, but you can still file your past-due tax returns.
In fact, with a little effort, you can take care of this daunting task and avoid any further penalties from the IRS.
So let’s dive in and learn how to file back taxes without records.
Why Should You File Back Taxes?
1. Claim a tax refund
One of the best reasons to file back taxes is to check if the IRS owes you a tax refund. Often, too much money is withheld from paychecks, and filing a tax return could result in a tax refund that puts money back in your bank account.
Who doesn’t love a little extra cash?
2. Avoid penalties and interest
Even if you don’t have the funds to pay what you owe right away, filing on time can minimize the fees you’ll have to pay later. Trust us; it’s better to file late than not and face even more penalties.
Let’s face it: none of us likes to think about taxes, but they’re unavoidable. Filing your taxes on time is crucial to avoid hefty penalties, even if you can’t pay the entire balance you owe.
Here’s the deal: if you don’t file your tax return by the deadline, you could be hit with additional penalties of 5% of the unpaid tax for each month your return is late for up to five months.
And that’s not all. The IRS also charges another penalty if you don’t pay your taxes owed.
Even if you file your taxes on time but can’t pay what you owe, you’ll be charged an extra 0.5% of the unpaid tax for each month you’re late.
People like to pay only what they have to, especially regarding taxes. If you’re worried about being unable to pay your total tax bill on time, don’t panic!
The smart move is to file your tax return by the deadline, even if you can’t pay the total amount owed.
When you don’t file on time, you risk racking up penalties that can add up quickly and make your tax debt even bigger.
These fees don’t stop accruing until your balance is paid in full or you hit the maximum penalty of 25% of your tax bill.
It’s essential to file your taxes on time or to file late rather than not filing at all.
3. Smooth loan application process
Lenders want to see proof of your income when it comes to getting a loan, like for a new home or business venture.
And one of the best ways to provide that proof is by filing your tax returns.
By doing so, you’ll have the documentation to show lenders that you have a steady income and can repay the loan.
Plus, filing your taxes ahead of time can save you a lot of stress and hassle down the road, making the loan application process smoother and more accessible for everyone involved.
4. Secure your financial future
As a self-employed individual, you must pay Social Security and Medicare taxes through your federal income tax return.
Filing your taxes isn’t just about staying out of trouble with the IRS. It’s also about making sure you’re setting yourself up for a secure financial future.
By reporting your income through tax returns and paying your taxes on time, you’re building a foundation that can help you qualify for Social Security retirement and disability benefits and Medicare benefits when needed.
Steps to Filing Back Taxes
Gather your information
When you’re filing back taxes, you’ll need to gather all the financial information you would for regular tax returns.
This includes details about your income from previous years, like your wages, investments, and any income from self-employment. You can find most of this information on your W-2 and 1099 forms.
You’ll also need your Social Security or individual taxpayer identification number to file tax returns. You’ll also need to provide personal information for yourself, your spouse, and any dependents you may have.
Request tax information from previous years
If you don’t have all the financial information you need, don’t worry! You can always request old tax records from the IRS.
They have a massive database of financial records that you can access anytime. You can request your tax transcripts to help you gather all the financial information you need from previous years. income
How Can You Find Past Financial Records?
If you need to file back taxes, there are a few different sources you can turn to for information.
Request tax transcripts from the IRS
You can request tax transcripts from the IRS if you don’t have your own financial records.
Tax transcripts are financial records that the IRS maintains, containing information from various sources such as W-2 forms, 1099s, and other tax records.
There are different types of tax transcripts, such as:
- Tax return transcript: A record of your current and past three annual tax returns. It can help you get up to date with your taxes, but remember that it won’t be available if you haven’t filed in the past three years.
- Tax account transcript: This shows your basic information, like your filing status, any payments you’ve made, and your taxable income, according to the IRS. This transcript might not match up precisely with your taxable income, but it can give you a good idea of what you owe.
- Record of account transcript: Contains the information from your tax return and tax account transcripts.
- Wage and income transcripts: Compiles information about your business from other sources, like 1099s and W-2s filed by different companies you’ve worked with or your employees. It can be helpful if you’re self-employed and must keep track of your income.
Getting access to your past tax information is essential when filing back taxes.
You can request your tax transcripts anytime from the IRS, and it’s easy to do so using their Get Transcript Online tool.
It’s the fastest and most efficient way for business owners to get their transcripts.
However, if you prefer to request it via mail or phone, you can order a tax return or tax transcript. Remember that this option will take longer to arrive, around five to ten days.
If you’re not using the online tool, you must complete Form 4506-T to request any IRS tax transcript.
Gather bank and credit card statements
If you’re trying to catch up on overdue taxes, bank, and credit cards, statements can help you record deposits, withdrawals, and business expenses.
It’s best to have separate accounts for personal and business users to quickly identify which expenses were for work and which weren’t.
To get these statements, log in to your online banking or contact financial institutions for assistance. You may also download your transactions directly from your accounting or tax software.
Don’t forget to check your Social Security statements, Forms W-2, and any other tax forms you’ve received related to financial accounts.
These can all provide valuable information when you’re reconstructing your financial history.
When you don’t have any other records, financial statements can be your lifeline in determining your business’s financial activity.
It’s essential to have accurate and complete records to ensure compliance and avoid any issues with the IRS.
Dig into past emails and paper records
Last but not least, don’t overlook any possible records you may have. Even the most minor pieces of information can be helpful, whether it’s a shoebox of receipts or old emails with invoices and receipts.
If you’re running a service-based business, don’t forget about appointment books or supply order forms, which can provide proof of business expenses and income.
Your main goal should be to track down as many revenue and expense transactions as possible using these three primary sources.
Just be careful not to double up on transactions in your tax records if you already have them listed on a bank statement or another receipt.
Hire a TAX Professional
If you feel overwhelmed or unsure about filing back taxes, consider hiring a tax professional.
XOA Tax can guide you through the process and help ensure everything is correctly completed. Plus, they can help you navigate any tax issues you may face.
Complete and submit the return forms
Once you have all the necessary forms, use the tax forms from your filing year. For example, you must use 2022 tax return forms to file your 2022 taxes.
You can file these forms on the IRS website. Taking your time when filling out your tax return by hand is essential, as mistakes can be costly. Don’t rush through the process; ensure you understand each section before moving on.
List of Forms For Filing Back Taxes
- Form W-2
- Forms 1099-MISC or 1099-NEC
- Form 1099-G
- Form 1099-R
- Form SSA-1099
- Forms 1099-INT and 1099-DIV
- Form 1098-T
What happens if you forget to file your taxes?
Don’t sweat it, but don’t ignore it either. If you let too much time go by without filing, the IRS may step in and file a return for you – and trust me; it won’t be as generous as you would be.
They might miss out on essential deductions, tax credits, and exemptions that could save you money, and you could be on the hook for hefty penalties.
For each month (or partial month) that you’re past the due date, you could face a 5% penalty of your unpaid taxes, up to 25%.
After 60 days, the minimum penalty is a whopping $435 or 100% of the tax on the return. On top of that, you could also face a failure-to-pay penalty and interest.
But here’s the real kicker: if you ignore your tax debt, the IRS can take serious action to collect it, including putting a federal tax lien on your property.
Yikes! So don’t wait any longer; it’s time to file those back taxes and avoid unnecessary stress.
Filing back taxes without records may seem like a temporary roadblock, but taking the necessary steps to get back on track is essential.
By filing your past due tax return, you can claim any tax refunds you’re owed, stop late filing and pay penalties, and ensure that you have tax returns for loan applications and qualify for Social Security benefits.
If you’re unsure about the process, consider hiring a tax professional to guide you through it.