I’ve Never Filed Taxes in My Life. What Should I Do?

Filing taxes for the first time can feel overwhelming, especially if you’ve never done it before. Whether you’ve avoided filing due to uncertainty or simply didn’t realize you needed to, taking action now is necessary to avoid penalties and legal issues.

Even if you’ve missed multiple years, you can still catch up. Understanding your filing requirements, gathering the right documents, and exploring payment options will help you get back on track.

Who Must File a Return

Not everyone is required to file a tax return, but income level is the primary determining factor. For 2024, single filers under 65 must file if they earn at least $14,600, while those 65 and older must file if their income reaches $16,550. Married couples filing jointly must file if their combined income is at least $29,200 if both spouses are under 65, $30,700 if one is 65 or older, and $32,200 if both are. These thresholds adjust annually for inflation, so checking the latest figures is important.

Other factors may also require filing. If you had at least $400 in self-employment income, received over $1,250 in unearned income (such as dividends or interest) as a dependent, or had taxable Social Security benefits, you may need to file. Those who received advance premium tax credits for health insurance must also file to reconcile those payments.

Certain tax situations also require filing, such as owing alternative minimum tax (AMT), taking early withdrawals from retirement accounts, or repaying excess credits like the Premium Tax Credit or the American Opportunity Credit. Some people file even when not required to claim refunds from withheld taxes or refundable credits like the Earned Income Tax Credit (EITC).

Potential Consequences of Non-Filing

Failing to file a required tax return can lead to penalties, interest, and enforcement actions. The IRS charges a Failure to File penalty of 5% of unpaid taxes per month, up to 25% of the total balance owed. If a return is more than 60 days late, the minimum penalty is $485 or 100% of the unpaid tax, whichever is lower.

Unpaid taxes accrue daily interest at the federal short-term rate plus 3%, increasing the total amount owed. If you don’t file, the IRS may create a Substitute for Return (SFR) using available income data. These IRS-prepared returns often exclude deductions and credits, resulting in a higher tax bill than if you had filed yourself.

Ignoring tax obligations can lead to more serious consequences. The IRS can issue a Notice of Federal Tax Lien, which attaches to your assets and damages your credit score. If taxes remain unpaid, the government can levy bank accounts, garnish wages, and withhold Social Security benefits. In rare cases involving deliberate tax evasion, criminal charges may apply.

Catching Up on Previous Years

If you’ve missed multiple years of filing, the IRS generally focuses on the last six years under IRS Policy Statement 5-133. Filing these recent years is usually enough to meet compliance requirements, though longer gaps may require additional steps.

To file past-due returns, you’ll need the correct tax forms for each year. The IRS only accepts returns on the official forms for the corresponding tax year, as tax laws, deductions, and credits change annually. These forms are available on the IRS website, and many tax professionals and software providers offer older versions as well.

If you’re owed refunds for past years, timing is important. The IRS has a three-year statute of limitations on claiming refunds. For example, a 2021 tax return must be filed by April 15, 2025, to claim a refund. However, if you owe taxes, there is no time limit for IRS collection efforts, making it important to resolve unpaid balances as soon as possible.

Retrieving Past Income Records

Filing past-due returns requires accurate income records. If you’re missing documents, the IRS Wage and Income Transcript can help. This transcript compiles data from Forms W-2, 1099, 1098, and other informational returns submitted by employers, banks, and other entities. These transcripts are available for up to 10 years and can be accessed through the IRS Get Transcript tool online or by submitting Form 4506-T by mail.

For self-employed individuals or those with untaxed earnings, transcripts may not include all income. Checking with financial institutions, brokerage firms, and former clients can help reconstruct missing data. Many banks retain transaction histories for several years, and brokerage firms archive 1099-B and 1099-DIV statements detailing capital gains, dividends, and interest income. If a former employer no longer exists, requesting a Social Security Statement from SSA.gov can verify past wages, though it may not include all taxable earnings.

Arranging Payment Plans if Needed

Once past-due returns are filed and outstanding tax liabilities are determined, the next step is addressing any unpaid balances. The IRS offers multiple payment options to help taxpayers manage their obligations.

Those who can pay in full should do so to minimize interest and penalties. If full payment isn’t possible, Installment Agreements allow taxpayers to pay over time. Individuals owing $50,000 or less in combined tax, penalties, and interest can apply for a long-term payment plan online, spreading payments over up to 72 months. Interest continues to accrue, but this prevents more aggressive collection actions. For balances above this threshold, a financial statement (Form 433-F or 433-A) may be required.

If financial hardship prevents any payment, Currently Not Collectible (CNC) status may be an option. This temporarily halts IRS collection efforts, though the debt remains.

For those seeking to settle for less than the full amount, an Offer in Compromise (OIC) may be available. This program allows qualifying individuals to negotiate a reduced tax liability based on income, expenses, and asset equity. The IRS evaluates reasonable collection potential (RCP) to determine eligibility. While approval rates are low, those who qualify can significantly reduce their tax burden. To apply, taxpayers must submit Form 656, a $205 application fee, and an initial payment, unless they meet low-income criteria.