Catching Up on a Decade of Unfiled Taxes
It’s not uncommon for a taxpayer to go ten years without filing tax returns. During that time, they may have advanced in their career or even started a successful business. However, when they decide to purchase a home, they often face a significant hurdle: mortgage lenders require proof of income and prior tax returns.
The Opportunity to Reconcile with the IRS
This situation presents an ideal opportunity to catch up with the IRS and move closer to achieving homeownership. Filing those returns, especially when signed by a licensed CPA, will strengthen a mortgage application. Some CPAs may offer a discount for preparing multiple returns at once, easing the financial burden of getting back on track. Additionally, attaching a statement explaining the reason for late filing can be beneficial, as the IRS offers several waivers for late returns.
Steps to Refile and Maximize Tax Benefits
To begin the process, start with the oldest tax return first. This approach ensures that any Net Operating Losses (NOLs), accumulated disallowed real estate losses, accumulated depreciation, and other carryover items flow correctly from one return to the next. For instance, if you have unused Long Term Capital Gains, you can carry them forward to subsequent years, potentially reducing your taxable income.
Additional Considerations for Delayed Filing
When catching up on a decade of tax returns, it’s crucial to ensure that all relevant financial details are accounted for. Consider seeking professional advice to navigate the complexities of past tax laws, potential deductions, and credits that may apply to your situation. A thorough review of your financial history, including any investments or real estate holdings, can help identify areas where you might reduce your tax liability.
Final Thoughts
Filing a decade’s worth of tax returns can seem daunting, but it also opens the door to financial clarity and the ability to move forward with significant life decisions, such as buying a home. With the right approach and professional guidance, you can reconcile with the IRS and set the stage for a more secure financial future.
If you have any questions or need assistance, please don’t hesitate to contact us. You can reach out via email, give us a call, or simply fill out the contact form below, and we’ll get back to you as soon as possible. We’re here to help!
