Can I File Taxes This Year If I Didn’t File Last Year?

You can file a current-year tax return even if you did not file one for the previous year, as the Internal Revenue Service (IRS) processes returns independently of any past filing status. The most effective approach is to file both the overdue return and the current one. Addressing both years helps bring your tax record up to date, ensures you meet your obligations, and prevents potential complications.

Understanding the Consequences of an Unfiled Return

When a tax return is not filed on time and a balance is owed, financial consequences are triggered. The IRS can assess a Failure to File penalty of 5% of the unpaid taxes for each month the return is late, capped at 25% of the outstanding tax liability. For returns due in 2025 that are over 60 days late, a minimum penalty applies, which is the lesser of $510 or 100% of the tax owed.

In addition to penalties, interest accrues on any unpaid tax from the return’s due date until it is paid. This interest compounds daily, and the rate is set quarterly, calculated as the federal short-term rate plus three percent. The combination of penalties and interest can significantly increase the total amount owed over time.

You may also miss out on a tax refund. If you were due a refund for the unfiled year, you have a three-year window from the original due date to file and claim it, known as the refund statute of limitations. If you do not file within this timeframe, you forfeit your right to that refund and the U.S. Treasury keeps the money.

Gathering Your Tax Information for Both Years

To prepare both your current and prior-year tax returns, you will need to collect all relevant income and financial documents. These include:

• Forms W-2 from employers
• Forms 1099 for other income from sources like freelance work or investment dividends
• Records for any deductions or credits you plan to claim, such as receipts for charitable donations or educational expenses

Obtaining documents for a past year can be a challenge. A good first step is to contact the employer or financial institution that originally issued the document, as they may be able to provide a copy.

If you cannot get documents from the original source, request a free “Wage and Income Transcript” from the IRS. This transcript shows data from information returns the IRS has received under your Social Security number, such as from Forms W-2, 1099, and 1098. You can request this transcript online through an IRS Online Account, by mail using Form 4506-T, or by phone.

You will also need the correct tax forms for the specific year you are filing. Prior-year forms, like Form 1040, and their instructions are available on the IRS website’s “Prior Year Forms & Publications” page. Using the correct year’s forms is necessary because tax laws and available deductions change annually.

The Step-by-Step Filing Process

Once you have your documents, complete the delinquent tax return first. You should file the prior-year return and wait for the IRS to process it before submitting your current one. This sequence is important because the outcome of the older return, like an overpayment applied to the next year, can affect your current return’s calculations.

Submission methods for current and prior-year returns differ. Current-year returns can be filed electronically, but prior-year returns must be printed and filed by mail if you prepare them yourself. Some tax professionals can e-file returns for recent past years, but mailing is the standard method for individuals.

When mailing a paper return, you must sign and date it and attach a copy of your Form W-2 to the front of Form 1040. The correct mailing address is listed in the instructions for that year’s tax form on the IRS website. Processing for a mailed paper return takes significantly longer than an e-filed one, often six weeks or more.

Managing a Tax Refund or Bill

If your current-year return results in a refund but you owe taxes for the unfiled prior year, the IRS will likely use the refund to cover the old debt. This process is known as a tax refund offset. The Treasury Department’s Bureau of the Fiscal Service (BFS) manages this program, which can also cover other debts like past-due state income tax. You will receive a notice from the BFS explaining the offset.

If you owe taxes for one or both years, the IRS will send a bill detailing the total amount due, including the original tax, penalties, and interest. If you cannot pay the full amount immediately, the IRS offers several payment options to help manage the debt.

One option is to apply for a payment plan. You may be able to set up a short-term payment plan of up to 180 days or a long-term installment agreement online. A long-term agreement allows you to make monthly payments for up to 72 months for combined balances under $50,000. Setting up a payment plan can help you avoid more serious collection actions.