Prepare Your Prior Year Tax And Get On With Your Life
on September 1st, 2010Folks get behind on preparing and filing their taxes for a number of reasons. Uncertain times in their private life, short on money to pay the tax bill.
An associate of mine was undergoing a challenging divorce. It was not the best of times in his personal life believe me. And around rolls in April 15th – the deadline for preparing and filing his taxes. He even had a difficult time figuring out whether or not to file jointly or separately – not to mention the issues of talking with his wife about taxes. And so the reality is filing a tax return is the last thing on his mind.
Did you know that the IRS is holding on to millions of dollars in refund money from individuals who never cared to file a tax return.
Allow me to share some considerations to remember for anyone who is planning to prepare a prior years unfiled tax return:
- You have to be current on your prior year’s taxes to receive a refund on a current year tax return. For instance to file a 2010 tax return, you ought to have filed all the prior years tax returns. If you think you are going to get yourself a tax refund in 2010, you should definitely need to prepare and file your prior years tax returns to make it current.
- It is possible to file a prior year tax return for upto three years back and still get a refund. So lets say you did not file your 2008, 2009 and 2010 tax return, it is possible to still file them now and be eligible for a tax refund on your 2010 tax return.
Prior year taxes can be filed anytime throughout the year. You do not have to wait around for April 15th.
What does it take to prepare and file a prior year tax return
One of the most expensive method of doing your prior year taxes is by using an accountant. Not all accountants are alike when it come to having the work done. But one thing is almost certain – preparing and filing a tax return from prior year is actually much more expensive using an accountants than preparing your current year taxes.
So why do professionals charge you more money for your prior year taxes ?
Tax rates, brackets, exemptions and taxcredits changes from year to year. So effectively your tax preparer has to go back to back a few years to figure out all these things.
Could you prepare prior year taxes all on your own ?
Yes! To do this by hand you must first step is to look for the prior years tax forms. For instance to file a 2008 tax return you would have to file it using tax form from 2008.
The forms are not that easy to find particularly when you go back a few years. To find the forms even on the IRS site is hard. Not only you’ll need the actual tax forms, you also need the instructions that go with it. Next comes the difficult job of having your paperwork in order and lastly the hard part – the number crunching.
There has to be a simpler way ?
Indeed!
Several tax sites provide online preparation of prior year taxes. These websites guide you through an interview process. For those who have used one of the major tax sites you will be acquainted with the carefully guided interview process. The software program walks you thru the steps of capturing your personal and tax info. If you don’t have a priror year W2, there are specific steps you can follow to obtain one.
You can find a list of websites for online preparation of your prior year taxes here.
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