Haven’t Filed Taxes in 3 Years? Know Your Rights and Possible Next Steps
As the Tax Cuts and Jobs Act (TCJA) takes effect, millions of Americans will face a critical decision: will they file their taxes for the past three years? In this article, we’ll explore the consequences of not filing taxes for an extended period, the potential consequences of the TCJA, and what you can do if you haven’t filed taxes in 3 years.
Why Won’t I File My Taxes?
Not filing taxes for 3 years can have significant consequences, including:
- Penalties and Interest: The IRS can add penalties and interest to your tax debt, which can quickly balloon out of control.
- Loss of Refund: If you’re due a refund, you might forfeit it if you don’t file your taxes on time.
- Audit Risk: The IRS may conduct an audit if you don’t file your taxes, which can result in fines and potential penalties.
- Damage to Credit Score: Unpaid tax debt can negatively impact your credit score, making it harder to obtain loans or credit in the future.
The TCJA and Tax Filing Obligations
The TCJA, signed into law in 2017, made several changes to tax filing obligations:
- Automatic Exemption: If you have a qualifying child under 18, their parent or guardian must file a tax return, even if you’re not claiming them as a dependent.
- Self-Employed Individuals: As a self-employed individual, you must file a tax return and report your business income and expenses if you have net earnings from self-employment of $400 or more.
- High-Income Individuals: The TCJA also imposes a 3.8% Net Investment Income Tax (NIIT) on investment income above $200,000.
- Digital Tax Credits: The TCJA also provides a new digital tax credit, which allows taxpayers to claim a credit of up to $25 for using cloud-based services.
Significant Tax Credits and Deductions
Some tax credits and deductions that might be affected by not filing taxes for 3 years include:
- Earned Income Tax Credit (EITC): If you’re eligible, you might be eligible for the EITC, which can provide a refundable tax credit.
- Child Tax Credit: If you have a qualifying child, you might be eligible for the Child Tax Credit, which can provide a refundable tax credit.
- Standard Deduction: You might still be eligible for the standard deduction, which can reduce your tax liability.
- Itemized Deductions: If you have itemized deductions, such as mortgage interest or charitable donations, you might still be eligible for these deductions, even if you don’t file taxes.
What Can You Do If You Haven’t Filed Taxes in 3 Years?
If you haven’t filed taxes in 3 years, here are some steps you can take:
- File for Fresh Start: You can file for a Fresh Start program, which can help you get back on track with your tax obligations.
- Pay Taxes Owed: You can pay your taxes owed using a payment plan or by making quarterly estimated tax payments.
- Contact the IRS: If you’re struggling to pay your taxes, you can contact the IRS to discuss possible alternatives, such as a tax payment plan or a reduction in penalties and interest.
- Seek Professional Help: If you’re feeling overwhelmed or unsure about how to handle your tax obligations, consider seeking professional help from a tax expert or accountant.
Conclusion
Not filing taxes for 3 years can have serious consequences, including penalties and interest, loss of refund, and damage to your credit score. However, there are steps you can take to address the issue, including filing for a Fresh Start program, paying taxes owed, contacting the IRS, and seeking professional help. By taking proactive steps, you can get back on track with your tax obligations and avoid any further consequences.
Resources
- IRS Website: www.irs.gov
- IRS Phone: 1-800-829-1040
- IRS Phone: 1-800-829-4933 (individuals with specific tax questions)
- Tax Professionals: Consider hiring a tax professional or accountant who can help you navigate the tax filing process and provide guidance on any specific issues you’re facing.