it is recommended to file the oldest tax return first. This is because information from an older return, such as a carry-forward loss or credit, can affect a subsequent year's tax return.
Here is a breakdown of the steps for filing overdue taxes:
Step 1: Request an extension and gather income documents
File an extension for the current year tax return when applicable.An extension gives you an additional six months to file, but not to pay. You can request an automatic extension by filing Form 4868 by the April deadline.
Gather past income statements.You will need your income information, such as W-2s and 1099s, for all unfiled years.
Contact former employers or payers.This is often the quickest way to get copies of lost tax forms.
Request an IRS transcript.The IRS can provide a Wage and Income Transcript for the past 10 tax years, free of charge. You can order it online, by phone, or by mail. A transcript is not a copy of your return but contains the necessary information from your W-2s, 1099s, and 1098s.
Step 2: Prepare and file past-due returns
Complete each year's tax return individually, in chronological order.You must use the tax forms specific to each year you are filing. You can find prior-year forms and instructions on the IRS website.
File by mail.You cannot e-file past-due tax returns for most years.
Address penalties.If you owe a tax liability, you should pay as much as you can to reduce penalties and interest. The IRS may be able to offer penalty relief for reasonable causes, such as a layoff or personal circumstances.
Step 3: File this year's return
File before the extended deadline.Since you already filed an extension, you must submit your return by the new, extended due date to avoid failure-to-file penalties.
Pay any tax owed.Even with an extension, any tax due must be paid by the original April deadline to avoid interest and late-payment penalties.
Why you should file chronologically
Potential credits and deductions:Filing older returns first allows you to account for any credits, such as capital loss carryovers, that may reduce your tax liability in more recent years.
Accuracy:Your prior year's adjusted gross income (AGI) may be needed to file electronically for a newer tax year. Filing chronologically ensures this figure is correct.
Refunds:For any year you are owed a refund, you have a limited time to claim it. Generally, you must file within three years of the original due date. Filing older returns first helps ensure you don't miss out on a refund.
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