Episode Details

Falling behind on taxes can feel overwhelming. Maybe you missed one year, then another. Maybe a job change, a divorce, an illness, a death in the family, or a season of financial hardship made it hard to keep up. Or perhaps you started gig work, received a 1099 for the first time, and were surprised to discover that you owed more than expected.

Whatever the reason, failing to file your taxes for several years is serious—but it is not the end of the road. The IRS would rather see you come back into compliance than continue avoiding the issue. The most important step is to begin.

Kevin Cross has helped many people walk through this very situation, and his counsel is simple: don’t panic, don’t ignore it, and don’t assume it’s too late to get help.

Start With the Current Year

If you have not filed taxes in several years, your first instinct may be to go back to the earliest missed return and start there. But Kevin often recommends a different first step: filing the most recent tax year.

The goal is to show the IRS that you are trying to come back into compliance. Filing the current year helps convey that this was not willful neglect but a season when something went wrong, and that you are now taking responsibility.

The further behind you are, the harder it can feel to catch up. But beginning with the most recent return can give you a clear starting point and stop the pattern from continuing.

Why People Fall Behind

There are many reasons someone may stop filing taxes. Some are self-employed or gig workers who receive a 1099 and discover they owe thousands of dollars because taxes were not withheld throughout the year. Others fall behind after a divorce, death, disability, job loss, or another major life disruption.

Since the COVID years, many people have also struggled to keep up with their tax responsibilities. Once one year is missed, it can be easy to feel overwhelmed and avoid the next one, too.

But avoidance only makes the problem heavier. The path forward begins with gathering information and getting the right help.

Not Filing Is Different From Not Paying

It is important to understand the difference between not filing and not paying.

If you owe taxes, the April deadline matters. You can file an extension to extend the time to file your return, but that extension does not extend the time to pay any tax you owe.

However, if you are due a refund, there is generally no penalty for filing late. But there is a time limit. If you wait too long—typically more than three years—you may lose the ability to claim that refund.

Some people may not be required to file at all. For example, if Social Security is your only source of income, you generally do not need to file a federal tax return. But the challenge is that many people do not know whether they owe or not until their information is reviewed.

Other income can change the picture, such as interest, dividends, retirement distributions, self-employment income, or the sale of a home. Even a home sale that qualifies for the primary residence capital gains exclusion may still need to be reported properly so the IRS understands why no tax is owed.

Gather Your Wage and Income Transcripts

One practical step is to request a wage and income transcript from the IRS. This transcript shows what the IRS has on file for you, including W-2s, 1099s, mortgage interest forms, retirement distributions, and other tax-related documents.

You can request this through the IRS website. Searching for “IRS wage and income transcript” should take you to the right place.

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