💰 Don’t Leave Money on the Table: Why You Must File Back Taxes Now
If you’ve missed filing a tax return, you might be focused on avoiding the IRS. But here’s a crucial fact that changes the math: The IRS might owe you money. Taxpayers across the U.S. miss out on billions in unclaimed refunds every year simply because they don’t file.
What many don’t realize is the power of refundable tax credits, which can put cash directly into your pocket even if you paid little to no tax during the year. Let’s discuss the compelling reasons why filing your back taxes is a wise financial move right now.
The Hard Deadline: You Only Have Three Years to Claim a Refund
While the IRS has ten years to collect a tax debt from you, you only have a three-year window from the original due date of the return to file and claim a refund. After that deadline passes, the money is gone—permanently.
- Urgent Example: The original post mentions that taxpayers had over $1.66 billion in refunds available from their 2018 tax returns. If they did not file by the specific deadline for that year (typically three years after the April due date), they lost that money forever.
The Good News: If the IRS owes you a refund, there is no penalty for filing the return late. You only face penalties when you file late and owe the IRS money.
The Main Driver: The Earned Income Tax Credit (EITC)
The most compelling reason to file a delinquent return—even if you weren’t required to file—is the highly valuable Earned Income Tax Credit (EITC).
What is the EITC?
The EITC is a credit designed to assist low-to-moderate-income working households. Eligibility depends on your income, filing status, and whether you have children.
Why is the EITC a Game-Changer?
The EITC is a refundable tax credit. This means that if the credit is worth more than the tax you owe, the IRS will refund the difference to you.
- Significant Refund Potential: For example, a taxpayer with children could have been eligible for thousands of dollars in EITC for the 2018 tax year. If you didn’t file, you missed out on that cash.
If you were a lower-income earner and didn’t file a return for a past year, you should immediately file to see if you qualify for the EITC and other refundable credits.
Don’t Wait for the Knock
Beyond the money the IRS may owe you, there’s the inevitable reality of IRS enforcement.
- They Will Catch Up: The IRS receives income information (W-2s, 1099s) from employers and banks. They know you earned income, even if you didn’t file.
- Debt Accumulation: If you did owe tax, failing to file allows penalties and interest to pile up rapidly, turning a manageable problem into a crisis.
The Bottom Line: You have nothing to lose by getting those past returns together and seeing what it does for your bank account. If the IRS owes you, you get cash. If you owe the IRS, you can proactively enter a resolution plan and stop the penalties from growing.
Ready to see if the IRS owes you money? Contact a tax professional today to get those back taxes filed before the refund deadlines expire.