Taxes can feel stressful at the best of times, but when trying to determine how many returns you need to file to stay compliant with the IRS the stress can get even worse. Whether you’re a small business owner, an independent contractor, or an individual taxpayer, understanding your filing requirements is crucial to avoiding penalties and ensuring peace of mind. This post will address these key concerns and guide you through the steps to get compliant with the IRS.
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How Many Returns Should I File?
The number of tax returns you need to file depends on your personal and financial situation. Here are some common scenarios:
- Individual Taxpayers If you’re a U.S. citizen or resident alien and earned income that meets or exceeds the standard deduction for your filing status, you’re required to file a federal income tax return. For the 2025 tax year, these thresholds vary based on factors such as your age, marital status, and filing type.
If your income surpasses these amounts, you must file a return:
- Single taxpayers under 65: $13,850
- Married filing jointly (both under 65): $27,700
- Small Business Owners and Self-Employed Individuals If you earn $400 or more from self-employment, you’re required to file a return. Additionally, partnerships, corporations, and S-corporations must file their respective business tax returns annually.
- Nonresident Aliens If you’re a nonresident alien engaged in a U.S. trade or business or earning U.S. income, you may also have filing obligations. Specific forms, such as the 1040-NR, are required.
- Special Circumstances If you’ve received income through gambling winnings, stock sales, rental properties, or other unique situations, you may need to file additional forms alongside your standard return.
Why Filing All Required Returns Matters
Failing to file all necessary tax returns can lead to serious consequences, including:
- Penalties and interest: The IRS imposes late-filing and late-payment penalties, which can quickly add up.
- Loss of refunds: If you’re owed a refund, failing to file within three years means forfeiting that money.
- Increased scrutiny: Noncompliance can trigger audits or collection actions, such as liens or levies.
Hubert Johnson from Guardian Tax Law emphasizes that understanding your obligations is the first step in avoiding unnecessary expenses and stress. He explains that too many tax preparers may charge to file returns that aren’t necessary, potentially causing more harm than good.
How to Get Compliant with the IRS
If you’re unsure about your tax filing requirements or have fallen behind on filing, here are steps to get back on track:
1. Identify Missing Returns
Start by reviewing your tax records. Determine which years you haven’t filed and gather the necessary documentation, such as W-2s, 1099s, or other income records. The IRS’s “Get Transcript” tool can help retrieve information from past years. Learn more about Substitute for Returns and how the IRS might file for you.
Hubert notes that understanding the IRS’s six-year compliance rule is vital. This rule typically requires taxpayers to file the last six years of returns to achieve compliance unless special circumstances, such as fraud allegations, dictate otherwise.
2. File Delinquent Returns
Prepare and file all unfiled tax returns as soon as possible. The IRS typically prefers voluntary compliance and may reduce penalties if you proactively address the issue.
Hubert shares that knowing the appropriate strategy for filing can save time and money. For example, if a return is near the January 1st deadline when it would no longer be required, you can often avoid filing it altogether by focusing on more recent years.
3. Request Penalty Relief
If you’ve fallen behind due to reasonable circumstances like illness, natural disasters, or financial hardship, you may qualify for penalty abatement. Include a written explanation when filing your late returns.
4. Set Up a Payment Plan
If you owe back taxes, consider establishing an installment agreement with the IRS. This allows you to pay off your debt over time while avoiding aggressive collection actions.
5. Seek Professional Assistance
Navigating IRS compliance can be complex. Tax professionals specialize in resolving issues like unfiled returns and back taxes, ensuring you meet all obligations and avoid costly mistakes.
Hubert stresses the importance of hiring professionals with extensive experience dealing with the IRS. He has heard too many horror stories where poor advice or inaction led to defaulted agreements or rejected resolutions, ultimately making problems worse.
The Key to Staying Compliant
One of the best ways to stay ahead of your tax responsibilities is to meet filing deadlines consistently. Hubert likens this to staying on top of assignments in school—being proactive prevents unnecessary stress and complications. Filing on time, whether by April 15th or through an extension, is non-negotiable for long-term compliance.
Finally, maintaining a good relationship with a qualified tax preparer or CPA is critical. Hubert encourages taxpayers to find someone they trust to help them manage their ongoing obligations and avoid falling back into noncompliance.
Staying compliant with the IRS doesn’t have to be stressful. By understanding your obligations and taking proactive steps, you can safeguard your financial future and minimize risks. If you have questions or need help filing your returns, professional guidance can make all the difference.
Book a free consultation with a Guardian Tax Professional today to get clear answers to your unique situation.
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