25 Apr I haven’t filed taxes for 5 years. What should I expect?

Q. I haven’t filed taxes for five years. I want to finally make this right. What should I expect? Would filing for 2021 without filing the back years or make it worse?
— Unsure

A. We’re glad to hear you’re ready to make right this tax mess.

Here’s what to expect.

Most taxpayers are required to file a tax return each year. Failure to file and pay taxes is a serious issue with the IRS, which can result in severe penalties, said Jodi Cirignano, a certified financial planner and certified public accountant with Peapack Private Wealth Management in New Providence.

She said to get back on the right track, you will need to file your 2021 return and also file returns for the previous five years as soon as possible regardless of your reason for not filing.

To prepare prior years’ tax returns, you will need tax documents such as W-2s and 1099s, she said.

“If you are unable to locate these, you can visit the IRS Get Transcript website to order copies of transcripts of past returns, tax account information, wage and income statement and verification of non-filing letters,” she said.

When filing returns for prior tax years, you need to use the appropriate form for that tax year. You can get these forms on the IRS website. 

“Filing your current and past-due tax returns is a major undertaking and we highly recommend that you engage a tax professional to assist you,” Cirignano said. “In addition to helping you understand what information you need to gather, preparing and filing returns, you can authorize your tax professional to contact the IRS on your behalf.”

And brace yourself. You may be subject to interest and penalties if you owed taxes for the previous five years, but your tax professional may be able to request penalty abatements and negotiate payment plans with the IRS, she said.

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This story was originally published on April 25, 2022.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.