Do You Need Previous Years’ Taxes to File?
Understand if and why past tax information is essential for accurate current filings, and learn how to access your records when needed.
Navigating tax season often raises questions about past financial records. While a complete prior tax return isn’t always strictly necessary, the specific details within those documents are frequently important for accuracy and verification. Understanding which pieces of information are relevant helps streamline various processes, whether for your annual return or other financial matters.
How Prior Year Information Affects Current Filings
Your previous tax year’s Adjusted Gross Income (AGI) is required for identity verification when e-filing your federal income tax return. Found on line 11 of your prior year’s Form 1040, this amount serves as an IRS security measure. Mismatched AGI can lead to e-file rejection. If you didn’t file last year, enter zero for prior-year AGI.
Beyond AGI, past financial elements can influence current tax obligations through “carryovers.” Capital losses exceeding gains (up to $3,000, or $1,500 if married filing separately) can be carried forward indefinitely to offset future income. Net operating losses from a business can also be carried forward to reduce subsequent taxable income. Ignoring carryovers can lead to overpaying taxes or missing deductions.
When selling assets like stocks or real estate acquired in prior years, the original cost, or “basis,” from previous records is necessary. This basis calculates any taxable gain or deductible loss from the sale. While investment brokers often provide basis details for securities, for other assets, your prior records are the primary source. This information, even if not the physical document, is essential for accurate current year filing.
How to Obtain Past Tax Records
If you lack previous tax records, the IRS offers several ways to obtain the necessary information. The most common method is requesting tax transcripts, which are summaries of your tax information, not exact copies of filed returns. Available types include the Tax Return Transcript (most line items from Form 1040), the Tax Account Transcript (basic data, payments, adjustments), and the Wage and Income Transcript (information reported by employers and other payers, like W-2s and 1099s).
You can request these transcripts free through the IRS “Get Transcript” service online for immediate digital access. Alternatively, request transcripts by mail or via automated phone service at 800-908-9946; delivery typically takes 5-10 days. For an actual copy of your original return, use Form 4506; this can take up to 75 days and may involve a fee.
Beyond IRS resources, your previous tax preparer likely retains copies of your filed returns. If you used tax preparation software, digital copies are often saved within the program or your online account. As a last resort, income information can be reconstructed from bank statements, W-2s, and 1099s.
Other Key Uses for Previous Tax Information
Previous tax information is also important for situations beyond current year filing. These include amending past returns, filing past due returns, and various financial applications.
To correct errors or missed deductions on a previously filed return, use Form 1040-X, Amended U.S. Individual Income Tax Return. Original return details are essential for accurately completing this form, ensuring changes are properly documented.
For past due tax returns, the same detailed income, deduction, and credit information as current returns is required. Access to records from those years is important for accurate preparation and submission. This ensures compliance and helps avoid potential penalties.
Prior tax information is routinely requested for various financial applications. Lenders, like mortgage providers, often require one to two years of tax returns to verify income stability and repayment capacity. Financial aid applications, such as the Free Application for Federal Student Aid (FAFSA), typically require federal income tax returns to assess student assistance eligibility. Often, consent to retrieve tax information directly from the IRS is part of the application process.