What If You Miss a Year Filing Your Taxes?

by W D Adkins
The IRS accepts tax returns even if they are years late.

People put off filing taxes all the time. You might procrastinate so long the return is late or you miss a year entirely. You may not be required to file a tax return. That depends on whether you made more than the Internal Revenue Service minimum gross income for your age and filing status. However, failure to file can cost you money even when IRS rules say you don’t have to do your taxes.

Why You Want to File

If you are required to submit a tax return and don’t, the IRS adds penalties to any past-due tax balance The IRS can also file a basic return for you using the income amounts reported by employers and financial institutions such as brokers and banks. If this happens, you don’t get any extra deductions to trim down your tax bill. Even when you don’t have to file, not doing so can be an expensive mistake. You might miss out on a tax refund. You need a tax return on record to get federal student aid for college and for unemployment benefits. Mortgage providers and other lenders may want to see tax returns before they’ll loan you money.

Tax Return Time Limits

If you miss a year filing your tax return, the IRS can review your records for that year and bill you for taxes at any time. There’s no statute of limitations as long as the return remains unfiled. There is a limit for getting any refund you might have coming, however. Your right to a refund expires three years after the original due date of the return. Suppose you missed filing for 2010. The original due date for 2010 returns was April 15, 2011. If you haven’t filed by April 15, 2014 you lose any refund you might have gotten.

Filing Missed Returns

If you missed a return, prepare and send in the overdue return, together with payment of any amount due. You must use the version of the tax return for the year you missed. The IRS keeps an online archive of old tax forms in PDF format. You can download and print a 1040, 1040A or 1040EZ and any other forms you need by going to the IRS Prior Years Forms and Publications website. Once you have the forms, fill them out and send them to the address given in the instructions.

The Cost of Late Returns

If the tax return you missed doesn’t show an amount due the IRS, there’s no monetary penalty for filing late. If you do owe Uncle Sam, you’re going to pay extra. First, there’s a late filing penalty of 5 percent per month up to a maximum of 25 percent of the amount you owe. The IRS also tacks on a late payment penalty of 0.5 percent per month up to a maximum of another 25 percent. On top of the penalties, the IRS hits you with interest on the overdue taxes. The interest rate is variable and there’s no limit. Interest will keep piling up until you pay the past due taxes.

About the Author

Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.

Photo Credits

  • Jupiterimages/Stockbyte/Getty Images