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Filing Prior Year Tax Returns – How will you go about it?

Taxes are Unavoidable

Taxpayers usually prefer to stay current on their taxes and pay up well within time to the Internal Revenue Service. However, it is oftentimes seen that due to unavoidable circumstances, tax payers may fall behind on payments due to a sudden death in the family, illness, a marital separation, or an unforeseen financial obligation. As a result, you fall behind on payments and struggle to get back on your taxes again. Prior to understanding what happens when you fall behind on tax payments, let us find out why you need to file tax in the first place?

Why Filing Is Important

Filing a tax return is required by law. If you are looking forward to financial aid from the federal government to pursue higher studies, it requires you to file. If you plan to apply for a loan, either for personal or commercial use, you will be required to produce copies of your tax returns. Most importantly, paying your taxes ensures that you are able to enjoy all the future benefits pertaining of Social Security. You will also be able to avail other state benefits provided you report your income correctly to Internal Revenue Service.

How to File Back Tax Returns

You will find that you are not the only taxpayer who finds themselves needing to file back tax returns or paying back taxes. You must be at least late by 2/3 months to qualify to pay back taxes or to file a late return. You can either pay off back taxes on your own or you can seek assistance of a tax professional that is approved by the Internal Revenue Service. You may not qualify for all payment options, so you must find and understand the one that suits your condition best.

Consequences of Not Filing

If you fail to file your taxes regularly, there are several actions that the IRS may take against you. You may be required to shell out extra dollars in form of penalty as well as interest charges. And it is better to pay off soon as the delay will cause these penalties and interest charges to escalate. Oftentimes, it is seen that the amount you are entitled to pay usually goes up by as much as 25% if you fail to pay taxes.

Don’t Leave Refunds on the Table

Failure to file your returns and pay your taxes is not only illegal, but also deprives you of the benefit of a tax refund! If you haven’t file owed returns, you will have three years from the year you were supposed to file your return to do so. It is extremely important to abide by federal tax law and the matter should not be taken lightly. You will have to face a lot of trouble in the event the statute of limitation expires.