How to File Back Taxes and Pay What You Owe

Filing a tax return after the deadline has passed is a common situation. These unfiled returns, for which taxes may be owed, are often referred to as back taxes. The Internal Revenue Service (IRS) can charge penalties and interest on any unpaid taxes starting from the day after the tax filing deadline. Failing to file can lead to the IRS creating a substitute return on your behalf, which may not include deductions or credits you are entitled to claim.

By not filing, you may also forfeit potential refunds. If you are due a refund, you have a three-year window from the original due date of the return to claim it. Beyond this period, any refund is lost. Having a history of unfiled tax returns can create obstacles when applying for loans, such as mortgages or student aid, as lenders often require copies of your most recent tax filings to verify income.

Gathering Your Tax Information and Forms

The initial step in addressing unfiled taxes is to collect all the necessary financial documents for each specific year you need to file. This includes any Forms W-2 from employers and various Forms 1099 that report other types of income, such as those for nonemployee compensation (1099-NEC), miscellaneous income (1099-MISC), or distributions from retirement plans (1099-R). You will also need records related to potential deductions and credits, like statements for mortgage interest paid (Form 1098), property taxes, or charitable contributions.

If you find that you are missing income documents, you can obtain the data directly from the IRS. The agency maintains records of information reported by employers and other payers. You can request a free “Wage and Income Transcript” for a specific tax year, which will show the data from every W-2, 1099, and 1098 form filed under your Social Security number.

To get this transcript, you can use the IRS’s “Get Transcript” online tool, which provides immediate access after you verify your identity. Alternatively, you can complete and mail Form 4506-T, “Request for Transcript of Tax Return,” to the IRS. On this form, you will check box 8 to specify that you are requesting a Wage and Income Transcript. This transcript provides most of your income information but will not include details about deductions or credits you might be eligible for, so you will still need your personal financial records for those items.

Once you have your financial information, you must locate the correct tax forms for the specific years you are filing. You cannot use a current year’s Form 1040 to file a return for a prior year; each year has its own unique set of forms and instructions. The IRS website has a dedicated “Prior Year Forms & Instructions” page where you can find and download everything you need. It is important to download not only the Form 1040 for the specific year but also the corresponding instruction booklet.

Completing and Submitting Your Tax Returns

It is important to use the instruction booklet that corresponds to the specific tax year you are filing. These instructions provide line-by-line guidance, detail any tax law changes for that year, and contain the necessary tax tables to calculate your liability correctly.

After you have filled out a return for a prior year, you must submit it to the IRS. Unlike current-year returns, which can often be filed electronically, tax returns for previous years generally must be printed and mailed. This requirement means you will need to physically send each completed tax return to the appropriate IRS service center. It is a best practice to mail each year’s tax return in a separate envelope to avoid any potential confusion or processing errors at the IRS.

To find the correct mailing address, you should refer to the instruction booklet for the specific Form 1040 you are filing. The addresses can vary based on the state you live in and whether a payment is included with the return. Using the address provided in that year’s instructions ensures the return is sent to the correct processing facility. For your own records, consider using a mail service that provides tracking and proof of delivery, which can serve as evidence that you filed the return.

Managing Your Tax Bill

After the IRS processes your filed back taxes, you will receive a notice of tax due, such as a CP14 notice. This notice will detail the total amount you owe, which includes the original tax liability plus any accrued penalties and interest. If you cannot pay the full amount immediately, the IRS offers several payment solutions.

For those who can pay their tax debt in a relatively short period, the IRS may grant a short-term payment plan, providing up to 180 additional days to pay in full. This option is available to individuals who owe less than $100,000 in combined tax, penalties, and interest. It can often be requested online through the IRS payment agreement application or over the phone. There is no user fee to set it up, although interest and penalties will continue to accrue on the unpaid balance until it is paid off completely.

If you require more than 180 days to pay, you can apply for a formal Installment Agreement. This allows you to make monthly payments for an extended period, often up to 72 months, and is generally for individuals who owe a combined total of $50,000 or less in tax, penalties, and interest. You can apply for an installment agreement online or by submitting Form 9465, “Installment Agreement Request.” There are setup fees associated with these agreements, which can vary depending on your income and how you apply, but they may be reduced or waived for low-income taxpayers.

For taxpayers experiencing significant financial hardship who cannot afford to pay their tax liability in full, an Offer in Compromise (OIC) may be an option. An OIC allows certain individuals to resolve their tax debt with the IRS for a lower amount than what they originally owed. The IRS evaluates an OIC application based on a strict set of criteria, including your ability to pay, your income, your expenses, and the equity of your assets. To apply, you must submit Form 656, “Offer in Compromise,” along with a detailed financial statement. Individuals use Form 433-A (OIC), while businesses must file Form 433-B (OIC).

Addressing State Back Taxes

Filing your federal back taxes does not resolve any outstanding tax obligations you may have at the state level. State income taxes are administered by separate government agencies, and their filing and payment requirements are independent of the IRS. You must determine if you also have unfiled returns or unpaid taxes with your state.

The process for filing state back taxes varies considerably from one state to another. Each state has its own tax laws, forms, and procedures for handling delinquent returns. You will need to identify the specific tax agency for your state, which is typically called the Department of Revenue or a similar name. Their official website is the best resource for finding the necessary prior-year tax forms and instructions.

Once you have the necessary information, you can complete and submit your state back taxes. Similar to the federal process, you will likely need to download the forms for the specific years you missed and mail them to the designated address. If you owe state taxes, the agency will also have its own set of payment options, which may include installment agreements or other relief programs.