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Have unfiled tax returns? You could still get a refund

On Behalf of | Nov 30, 2020 | Income Taxes

Some people may not have filed their taxes for multiple years. The reasons behind their not filing can differ from person to person, but the longer a return goes unfiled, the more serious the issue could become. As a result, even if you are behind on your tax returns, it may work in your favor to file those returns.

Filing tax returns for multiple years is an option, and it is not always a negative step to take. It is difficult to know exactly what type of outcome a tax return will have, namely, whether a person will owe or get a refund. Getting a refund is even possible for years that have gone unfiled; however, you must file them to know whether that is possible for you.

Many people feel hesitant

After not filing for multiple years, many individuals in Atlanta and elsewhere feel hesitant to file their back returns. They may automatically assume that the IRS will punish them for not filing those returns, but not filing can have negative effects of their own. For example, the IRS could file a return on your behalf, known as a substitute return, and that return would only have the information provided by your employer regarding your income. This means, it would not include any deductions or credits you may be entitled to.

If the IRS files a substitute return and the information the agency has results in your owing taxes, the agency will begin collection efforts to obtain what you owe. This could even lead to drastic actions such placing a levy or lien on your assets.

It may not be as bad as you think

Certainly, filing a late return could lead to penalty fees and interest charges if you owe taxes for previous years. However, if you file a return that results in your being owed a refund, you could collect that refund as long as you file the return within three years of it original due date.

Handling multiple years of tax returns and going over the possible outcomes can be complex. As a result, it may work in your best interests to have help with your situation. Fortunately, experienced tax attorneys could help you and others in similar situations assess their specific tax issues and follow through with viable courses of action.