7 Reasons to File Your Back Tax Returns

By Nikia Owens, Ph.D.

Filing back taxes is crucial for achieving financial stability and peace of mind. Many delay this task due to economic hardship, oversight, or fear of owing money, but neglecting it can lead to serious consequences. At the Campaign for Working Families, we educate and assist individuals in fulfilling their tax obligations. Here is why you should file your back tax returns immediately.

  1. Avoid Penalties and Interest Unpaid taxes accrue penalties and interest, increasing your debt over time. Filing back taxes stops additional penalties and helps manage your financial situation more effectively.
  2. Claim Your Refunds You may be entitled to refunds that can only be claimed within three years of the original filing deadline. After this period, unclaimed money goes to the U.S. Treasury. Filing back taxes ensures you receive any refunds due.
  3. Protect Social Security Benefits For self-employed individuals, unreported income results in lower Social Security benefits at retirement. Filing past-due returns ensures all your income is reported, protecting your future benefits.
  4. Obtain Loans and Financial Aid Financial institutions require proof of income and tax compliance for loans or financial assistance. Without current tax returns, securing a mortgage, car loan, or student financial aid becomes difficult. Keeping tax records up-to-date facilitates smoother transactions.
  5. Avoid Collection Actions The IRS can garnish wages, levy bank accounts, and place liens on property to collect unpaid taxes. These actions harm your financial well-being and credit score. Filing back tax returns prevents such measures and allows you to arrange manageable payment plans.
  6. Maintain Compliance and Peace of Mind Filing late returns ensures compliance with federal law and alleviates the stress of unresolved tax issues. It provides peace of mind, allowing you to focus on other financial matters.
  7. Reduce Audit Risk Unfiled tax returns may lead the IRS to estimate your tax liability, often resulting in an inflated tax bill. Filing your returns provides accurate information, reducing the risk of audits or incorrect assessments.

How to Get Started

Gather all necessary documents and seek professional help if you have past-due tax returns. The Campaign for Working Families offers free tax preparation services to help you meet your tax obligations confidently.

For more information about CWF’s FREE tax preparation services, visit cwfphilly.org or contact us at 215-454-6483.

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