When do I have to complete past tax returns?
There are dozens of reasons a taxpayer might need to complete or alter past tax returns. These can vary from simple reasons like needing to clarify a deduction to dealing with a full blown audit. Whatever the case, the process should be taken care of as soon as possible.
You Catch a Mistake
If there is a need to file past tax returns, this is the most beneficial to you. Catching mistakes on your own prevents the IRS from handing out further fines to you. Don’t assume the mistake will go unnoticed. The IRS actually has been cracking down on past tax returns recently and more than likely will find it.
Even if you think the mistake is small, such as an undocumented itemized deduction, it’s best to err on the side of caution. The situation may be that you only need to refile and don’t owe anything else.
The IRS Contacts You
This is worse than catching the mistake yourself, as the IRS may levy further fines on you on top of the taxes you owe. However, this may not be the case, and potentially the only consequence will be having to pay the taxes you already owe. Either way, complete the past tax returns as soon as you can to avoid interest or other fees.
You’re Owed Taxes
Speaking of catching mistakes, this one is the ideal situation! While the IRS seems more like a machine, it is still filled with people, and they mistakes. Or maybe you or your tax preparer made a mistake. No matter what happened, sometimes you’re owed more money than you actually got. Talk about a good day!
In this case, you’ll definitely want to file the past tax returns as soon as you can. Nine times out of ten the IRS will not contact you about the funds so you’ll have to do all the work. Of course, it’ll be worth it in the long run when you have extra money in your pocket.