Life can get busy, and sometimes, filing taxes slips through the cracks. If you find yourself in a position where you need to file two years of taxes on TurboTax, don't fret! While it might seem daunting, it's a manageable process. This comprehensive guide will walk you through each step, helping you get caught up and back on track.
Hey there! Have you ever felt that sinking feeling when you realize you're behind on something important, like your taxes? Many people have, so you're definitely not alone. The good news is, taking action now is the best way to minimize potential penalties and get your financial house in order. Let's tackle this together, step by step!
Understanding the Landscape of Back Taxes with TurboTax
Before we dive into the "how-to," it's crucial to understand a few key things about filing prior-year returns with TurboTax:
Separate Filings: Each tax year is a distinct entity. You cannot combine multiple years into one return. You'll prepare and file each year's return separately.
Software Requirements: TurboTax's online platform is generally designed for the current tax year. For prior years, you'll typically need to purchase and download the desktop version of TurboTax for each specific year you intend to file. TurboTax usually offers desktop software for the past three tax years. For even older years, you might need to seek alternative solutions or contact a tax professional.
No E-filing for Prior Years: While you can e-file your current year's return, prior-year returns prepared with TurboTax cannot be e-filed. They must be printed, signed, and mailed to the IRS and your state tax agency (if applicable).
Penalties and Interest: The IRS and state tax agencies can assess penalties for failing to file on time and for failing to pay on time. Filing your back taxes, even if you can't pay the full amount immediately, can significantly reduce "failure to file" penalties. Interest will also accrue on any unpaid taxes.
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| How To File Two Years Of Taxes On Turbotax |
Step 1: Gather Your Documents (The Detective Work!)
This is arguably the most critical and potentially time-consuming step. Without the right documents, you can't accurately prepare your returns. Think of yourself as a financial detective!
Sub-heading 1.1: Income Statements
W-2s: These are for wages earned from employers. Contact your previous employers if you don't have them.
1099 Forms: These cover various types of income:
1099-NEC: Non-employee compensation (for freelance or contract work).
1099-MISC: Miscellaneous income (rent, royalties, prizes, etc.).
1099-INT: Interest income from banks.
1099-DIV: Dividend income from investments.
1099-R: Distributions from pensions, annuities, IRAs.
1099-G: Unemployment compensation, state tax refunds.
K-1s: For income from partnerships, S corporations, or trusts.
Statements for Stock Sales (Form 1099-B): If you sold stocks or other investments.
Sub-heading 1.2: Deduction and Credit Information
Mortgage Interest Statements (Form 1098): For home loan interest paid.
Student Loan Interest Statements (Form 1098-E): For student loan interest paid.
Tuition Statements (Form 1098-T): For qualified education expenses.
Childcare Expenses: Records of payments to daycare providers.
Medical Expenses: Receipts or statements for unreimbursed medical costs.
Charitable Contributions: Receipts for cash and non-cash donations.
Property Tax Records: For taxes paid on real estate.
Any other records that support deductions or credits you might be eligible for (e.g., business expenses for self-employment).
Sub-heading 1.3: What if You're Missing Documents?
Contact Payers Directly: Your former employers or financial institutions may be able to provide copies of W-2s or 1099s.
Request IRS Tax Transcripts: The IRS offers free tax transcripts that summarize your income information (like W-2s and 1099s reported to the IRS). You can request these online, by mail, or by phone. This is a highly recommended step if you're missing a lot of information. Visit IRS.gov and search for "Get Transcript."
Don't let missing documents deter you. The IRS prefers you file, even if you have to estimate based on your best available information, rather than not filing at all.
QuickTip: Treat each section as a mini-guide.
Step 2: Purchase and Install TurboTax Desktop Software for Each Year
As mentioned, you'll need the desktop version of TurboTax for each prior year you want to file.
Sub-heading 2.1: Where to Buy Past Year Products
Visit the official TurboTax website and look for their "Past Years Products" section.
You might also find older versions of TurboTax desktop software at major retailers like Amazon, Best Buy, Costco, or Walmart. Ensure you are purchasing the correct tax year's software.
Sub-heading 2.2: Installation and Setup
Once purchased, download and install the software on your full PC or Mac. It typically cannot be used on mobile devices.
Install each year's software separately. You'll likely need to install the software for the earliest year you're filing first, then move to the next year.
Step 3: Prepare Each Year's Tax Return, One by One
This is where TurboTax guides you through the process, just like it would for a current-year return.
Sub-heading 3.1: Start with the Earliest Year
It's generally recommended to file your returns in chronological order, starting with the oldest year you owe. This is because information from an earlier year (like a carryover loss) might affect a later year's return.
Open the TurboTax desktop software for the earliest year you need to file.
Sub-heading 3.2: Enter Your Information Accurately
Follow TurboTax's step-by-step interview process.
Carefully input all your income, deductions, and credits for that specific tax year, using the documents you gathered in Step 1. Double-check every number.
Important Note: The tax laws, deductions, and credits can change from year to year. TurboTax's prior-year software will have the correct forms and calculations for that specific year, which is why using the correct year's software is crucial.
Sub-heading 3.3: Complete Federal and State Returns
Just like current year filing, you'll need to prepare both your federal and any applicable state tax returns for each year.
TurboTax will guide you through this process. Remember, state tax laws also change, so having the correct year's software is key for state returns as well.
Sub-heading 3.4: Review and Audit Checks
Before finalizing, utilize TurboTax's review function. It will check for common errors and missed deductions.
Take your time with this review. A small mistake can lead to delays or further issues with the IRS or state.
QuickTip: Slow down when you hit numbers or data.
Step 4: Print, Sign, and Mail Your Returns (No E-filing!)
This is a critical distinction for prior-year returns.
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Sub-heading 4.1: Print Your Returns
Once you've completed and reviewed a year's federal and state returns, print them out.
Print all supporting documents that TurboTax instructs you to include, such as W-2s, 1099s, and any other forms showing tax withheld.
Sub-heading 4.2: Sign and Date Everything
Federal Return: Sign and date your federal tax return in the designated area. If filing jointly, both spouses must sign.
State Return(s): Sign and date your state tax return(s) as well.
Failure to sign your returns will result in them being sent back to you, causing further delays.
Sub-heading 4.3: Prepare for Mailing
Separate Envelopes: Federal and state tax returns must be mailed in separate envelopes. They go to different addresses.
Federal Mailing Address: The mailing address for your federal return will be provided in the TurboTax instructions when you print your return. It varies based on your state and whether you're including payment.
State Mailing Address: Similarly, the mailing address for your state return will be provided in the TurboTax instructions.
Attach all required supporting documents (W-2s, 1099s, etc.) to the front of your federal and state returns as instructed. Do not just send them loose.
Sub-heading 4.4: Send with Tracking
It is highly recommended to mail your returns using a service that provides tracking and delivery confirmation, such as Certified Mail from the USPS. This gives you proof that your returns were sent and received, which can be invaluable if there are any questions later.
Keep a copy of everything for your records: the filed returns, supporting documents, and mailing receipts.
Step 5: Address Any Taxes Owed
If you owe taxes for either year, it's important to address this even if you can't pay the full amount.
Sub-heading 5.1: Include Payment if Possible
If you can pay the taxes owed, send a check or money order (do not send cash) with your mailed return. Make sure to clearly indicate the tax year and your Social Security Number on the payment.
Sub-heading 5.2: What if You Can't Pay?
File Anyway: Even if you can't pay, still file your returns. This stops the "failure to file" penalty, which is often much higher than the "failure to pay" penalty.
Payment Options with the IRS:
Short-Term Payment Plan: You can request up to 180 days to pay your tax liability in full, though interest and penalties still apply.
Offer in Compromise (OIC): This allows certain taxpayers to resolve their tax liability with the IRS for a lower amount than what they originally owe. This is usually for those facing significant financial hardship.
Installment Agreement: You can make monthly payments for up to 72 months.
Contact the IRS: It's always best to contact the IRS to discuss payment options if you cannot pay your tax bill in full. They are generally more lenient with taxpayers who are proactively trying to resolve their tax issues. The same applies to your state tax agency.
QuickTip: Revisit key lines for better recall.
Step 6: Repeat for the Second Year
Once you've completed and mailed the first prior-year return, simply repeat Steps 2-5 for the second year you need to file. Remember, each year is a separate filing with its own software, printing, and mailing.
Important Considerations
Refunds: If you are due a refund for a prior year, you generally have three years from the original due date of the return to claim it. If you file after this window, you might forfeit your refund.
IRS Notices: If you've received notices from the IRS or your state regarding unfiled returns, make sure to follow any specific instructions provided in those notices.
Professional Help: If your tax situation is particularly complex (e.g., self-employment income across multiple years, significant missing documents, or very old unfiled returns), consider consulting a qualified tax professional (CPA or Enrolled Agent). They can help you navigate the process and potentially minimize penalties.
10 Related FAQ Questions
Here are some quick answers to common questions about filing back taxes with TurboTax:
How to: Get my old W-2s if I don't have them?
Contact your former employer's HR or payroll department. If they can't provide them, request a wage and income transcript from the IRS for the relevant year.
How to: Find the mailing address for my prior-year federal tax return?
The TurboTax desktop software for that specific year will provide the correct IRS mailing address when you print your return. You can also find it on the IRS website by searching for "Where to File" for the relevant tax year.
How to: Avoid penalties for filing late?
File your returns as soon as possible, even if you can't pay. This prevents the larger "failure to file" penalty. Then, contact the IRS (and your state) to arrange a payment plan for the "failure to pay" penalty and interest.
QuickTip: Read again with fresh eyes.
How to: Know if I'm eligible for a refund for past years?
Generally, you have three years from the original due date of the tax return to claim a refund. If you're beyond that, you've likely forfeited any refund.
How to: Access my prior-year tax returns if I used TurboTax Online?
Sign in to your TurboTax account with the user ID you used previously. On your "Tax Home," scroll down to "Your tax returns & documents" and select the year you need to download.
How to: Handle state tax returns for prior years?
Each prior-year state return must be prepared and mailed separately, just like federal returns. The specific TurboTax desktop software for that year will handle the state forms.
How to: Pay my taxes if I can't afford the full amount owed?
File your return anyway! Then, contact the IRS to set up a payment plan (short-term, installment agreement, or potentially an Offer in Compromise). Do the same for your state tax agency.
How to: Get a tax transcript from the IRS?
Visit IRS.gov and search for "Get Transcript Online" to get it immediately (if you can verify your identity), or request it by mail or phone.
How to: Know which version of TurboTax desktop software to buy?
Purchase the TurboTax desktop software specifically for the tax year you need to file (e.g., "TurboTax Deluxe 2023" for a 2023 return).
How to: Prevent this from happening again in the future?
Set calendar reminders for tax deadlines, organize your tax documents throughout the year, and consider filing as soon as you receive your essential documents at the beginning of each tax season.
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