How to Prepare Your Prior Year Taxes
By R Robson
Folks get behind on preparing and filing their taxes for many reasons. Challenging times in their private life, short on money to pay their taxes.
A friend of mine was undergoing a tough 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 to file jointly or separately – not to mention the challenges of talking with his wife concerning taxes. So the reality is filing a tax return is the very last thing on his mind.
Did you know that the IRS is holding on to millions of dollars in refund cash from folks who never cared to file a tax return.
Listed below are some points to remember should you be planning to prepare a prior years unfiled tax return:
– You need to be current on your prior taxes to receive a refund on the current year tax return. For example to file a 2010 tax return, you should have filed all the prior years taxes. If you think you are going to get a tax refund this coming year, you should definitely must prepare and file your prior years tax returns to make it current.
– You can file a prior year tax return for upto 3 years back and still get a refund. So lets say you did not file your 2008, 2009 and 2010 tax return, you can still file them now and be eligible for a tax refund on the 2010 tax return.
– Prior year taxes can be filed anytime throughout the year. You do not really have to wait around for April 15th.
How Do you Go About Filing a Prior Year Tax Return?
One of the most expensive way to do your prior year taxes is to use an accountant. Not all accountants are alike when it come to having the work done. But one thing is nearly certain – preparing and filing a tax return from prior year is in fact far more expensive using an accountants as compared to preparing your current year taxes.
So Why Do People Ask you for a Lot More Money to Do your Prior Year Taxes?
Tax rates, brackets, exemptions and credits changes from year upon year. So effectively your tax preparer has to go back to back a few years to figure out all these things.
Can you Prepare Prior Year Taxes Alone?
You bet! To do this by hand you would need to first step is to search for the prior years tax forms. For example 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 if you go back a few years. To obtain the forms even on the IRS website is difficult. Not only you need the actual tax forms, you also need the instructions which go with it. Next comes the difficult job of getting your records in order and finally the hard part – the number crunching
Can there be a Simpler Way?
Several tax web sites offer you online preparation of prior year taxes. These sites guide you through an interview process. For those who have used one of the major tax sites you will be familiar with the guided interview process. The software walks you through the steps of capturing your personal and tax details. If you don’t have a prior year W2, there are specific steps you can follow to obtain one.
Visit ttp://www.tax-easy.com/prior-year-tax to see a few tax providers who do prior year tax preparation online.
About the Author: Ron Robson is a management consultant and free lance writer. Visit his tax site to learn about Prior Year Tax preparation and hundreds of ways to organize your financial life.