Many situations may cause you to fall behind on your taxes, from significant life changes to financial hardship. While you will face some consequences, it’s not the end of the world if you’ve missed two years. Just focus on filing now. This step helps you move forward with more peace of mind.

Can You File Taxes From Two Years Ago?

Yes, you can and should file, even if it’s been several years. The Internal Revenue Service (IRS) accepts payments no matter how late you pay them. They can also go back and collect for any year you didn’t file.

You can file two years of taxes together. However, you must prepare and submit forms separately for each tax year.

What Penalties and Interest Will You Face if you haven’t filed taxes in Two Years?

Any late filing or payment will result in a penalty, but if you’ve only missed two years, the penalty will be lower than if you had missed more. Here’s an overview of the main penalties you will face:

  • Failure to file penalty: This penalty is incurred for not filing by the due date. Returns over 60 days late have a minimum penalty amount, or you must pay 100% of what you owe, whichever is less. If the IRS owes you a refund, this penalty doesn’t apply.
  • Failure to pay penalty: This penalty is for not paying taxes by the due date. The IRS will send a letter with the amount you owe. If you don’t pay by the due date in the letter, you must also pay a 0.5% penalty on the tax you didn’t pay for each month or partial month you don’t pay.
  • Interest on unpaid taxes: Your unpaid taxes also collect interest. The amount varies based on a quarterly rate determined by the IRS and compounds daily. You can discover the interest rates using information from the IRS Newsroom.

The IRS may provide penalty relief if you had a reasonable cause for not paying taxes. Working with an expert like BC Tax may help you take advantage of these and other benefits.

What Does the IRS Do?

When the IRS determines you haven’t filed taxes for the year, it will begin a notice sequence to inform you that you must do so. If you still don’t file, the IRS will send a final reminder warning that they will file a substitute return if you don’t respond.

If you haven’t filed taxes in two years, the IRS has likely already prepared substitute returns for those years. It’s best to file a tax return, which will take advantage of exemptions and credits.

What to Do If You Haven’t Filed Taxes for Two Years

While it may seem overwhelming to go back and file, it is better to file late than not at all. Start gathering your financial information, and consider working with a professional for expert advice. If you file now, you can still claim your refund. After three years, you forfeit this refund.

Get Peace of Mind With Professional Help

If you have unfiled taxes, our team at BC Tax can help. We work with you to clean up your taxes and may help reduce the amount you owe. Get in touch to discuss our services.

BC Tax Insights Team
Posted By: BC Tax Insights Team

Authored by the BC Tax Insights Team, this article reflects the collective expertise and experience of our seasoned tax professionals. The Insights Team at BC Tax comprises specialists with a deep understanding of various tax scenarios and solutions. With a focus on providing informative, accurate, and practical insights, our goal is to guide readers through the complexities of taxation and financial planning. Every piece is crafted with the intent to help individuals and businesses navigate the ever-evolving world of taxes, ensuring clarity and confidence in decision-making.