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How to Prepare a Late-File Federal Tax Return

It is to your best interest to file your tax return by the April 15 deadline every year. If you know that you will be unable to meet it, then you should file for an extension to avoid facing penalties for late non-filing. However, there may be times where you realize too late that you forgot to file your return for the previous year or perhaps an even earlier year. When this happens, you should file a return right away to avoid further problems.

Find the Right Year’s Return

Filing a late tax return is not too different from filing a regular one, although the best way to do so depends on the situation. You must use the correct year’s form to ensure you prepare everything according to the correct tax laws. You can obtain old return forms from the IRS, either from the local office or online. Certain tax software programs may also have forms from previous years. The hardest part is in finding the right information, especially if a significant period of time has passed. If you keep good records, then it will be a lot easier for you.

Verify Your Income, Expenses, Deductions, and Credits

You will have to find your old W-2 forms, 1099 forms, and other forms for your income. If you no longer have the form, it can be difficult to get it. Many businesses do not retain the information and may not be helpful in providing a new one. You do have some other options if you cannot get replacement forms.

You can ask the IRS for income data for the year or years for which you did not file. This will show the income that the IRS has on file for you, which is the amount you must report on the return. You can also use Form 4852, Substitute W-2, to reconstruct the salary records. If you are a contract employee or self-employed, then you need to do your best to accurately guess the missing 1099 data. You also will need to have documentation for any deductions or credits for which you are eligible for that year.

Be Extra Careful Preparing the Return

It is even more important that you prepare an accurate tax return if it is late than otherwise. When you send in a return at the normal tax time, it is not reviewed too closely, although it may still be flagged for audit at a later date. Conversely, a person reviews late file returns upon receipt, which means any mistakes will almost surely end in an audit and possible further problems. Working with a tax professional minimizes any problems. If you do not want to use a tax preparer, then you could try to get tax software for that year and use it to create the return. The IRS prefers computer-prepared tax returns, which also helps ensure that you do not make mistakes on your form.

Why You Should Use a Professional

Your best option for preparing a late-file federal tax return is to use a professional tax preparer. They can ensure that everything Is correctly filled out and properly handled. A tax professional can also help reduce the chance of adverse penalties, although you may still be subject to some fines and interest payment. Additionally, the IRS is more likely to not question a return if a CPA, tax attorney, or other tax professional has signed the return. Working with a tax professional can also help you to determine the right tax resolution solution if you owe money and will have a difficult time paying it. They will also provide you advice in how to avoid a similar problem in the future.

A late return could lead to a criminal investigation, but if you voluntarily file then you most likely will not face any prosecution. You still may face penalty fees and high interest, causing you to owe a significantly higher debt. Additionally, any refund that may have been due to you will most likely be denied. Despite any problems that may arise, it is ultimately best to file a return late than to never file one at all.

The expert tax professionals at Fidelity Tax Relief are standing by to help you file your late returns, reduce your tax debt, and avoid criminal and civil penalties. Contact us today to see how we can help you with your tax situation.

Time is running out!​

When you owe money on your federal taxes, one of the common collection actions taken is IRS tax garnishment, typically on your wages or salary. Wage garnishment can leave a person with very little money on which to live. 

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