Filing taxes every year is a legal requirement for most people in the United States. However, there are some circumstances where you may not have to file taxes for a certain period of time. Generally, the IRS requires individuals to file taxes on income earned in a given tax year. But if you did not earn enough income to necessitate filing, you may be able to go several years without submitting a return.
So how many consecutive years can you get away with not filing taxes? The answer depends on several factors, which will be examined in this article. We will look at the filing requirements, exceptions, and risks of not filing federal income taxes for multiple years in a row. With smart planning and understanding the rules, you may be able to legally avoid filing for a period of time. However, taking this path does come with cautions.
IRS Filing Requirements
In most cases, you must file a federal income tax return if your gross income exceeds the filing thresholds set each tax year by the IRS. For the 2022 tax year, the filing requirements are:
- Single filing status: $12,950
- Married filing jointly: $25,900
- Married filing separately: $5
- Head of household: $19,400
So as long as you do not earn income over these thresholds, you may not have to file. For example, a single person who earned $12,000 in 2022 does not have to file a tax return because they did not reach the $12,950 minimum.
However, there are other rules that can require you to file a return even if you do not meet the income thresholds:
- You had taxes withheld from your paycheck
- You qualify for the Earned Income Tax Credit
- You owe special taxes like self-employment tax
In these cases, you would need to file a return to get refunded taxes withheld or receive credits you qualify for despite lower gross income.
Exceptions from Filing
There are a few scenarios where you can go multiple years without filing, even if you meet the income filing requirements:
1. You live abroad
U.S. citizens living in a foreign country may be able to exclude enough foreign earned income to fall under filing thresholds. You can exclude up to $112,000 of foreign earned income in 2022. So if your only income is from working in a foreign country, you may not have to file if you make less than the foreign earned income exclusion amount.
2. You are in the military on duty outside the U.S.
Similar to living abroad, active members of the military can exclude income earned while serving outside the U.S. This can allow soldiers, sailors and marines to avoid filing during deployments if their total income falls below filing requirements after the exclusion.
3. You are in a declared combat zone
Military members serving in a combat zone have up to 180 days after leaving the zone to file returns and pay taxes. This extension gives additional time to file if you are stationed overseas in a declared combat zone.
4. You are in prison
Inmates in prison for criminal offenses are not required to file returns or pay income tax while incarcerated. Prisoners have no filing requirement during their imprisonment and can legally not file during this time.
5. You only have Social Security income
If Social Security benefits are your only form of income, you may not meet filing thresholds and can forego filing a federal return. However, you still may need to file in some states if you owe state income taxes on Social Security benefits.
6. You do not have a lawful residency status
Those without a lawful U.S. residency status, such as undocumented immigrants, are not required to file U.S. tax returns. However, they still have to pay taxes on income earned in the U.S. and may file returns using an Individual Taxpayer Identification Number (ITIN).
So in these special situations, you can legally avoid filing federal income tax returns if you continue meeting the exceptions.
Risks of Not Filing for Multiple Years
While you can get away with not filing for a period of time in certain cases, there are downsides to prolonged non-filing:
- You fail to claim tax refunds you may be owed, leaving money on the table.
- Penalties can apply once you start filing again for previous years missed.
- You miss out on certain tax credits you may qualify for.
- Your non-filing status could be flagged if you have activity like wages or mortgage interest reported to the IRS.
- You lose the option of receiving a tax refund in the future for the skipped years.
The potential costs often make it not worth avoiding filing for multiple consecutive years.
How Many Years Can You Skip Before the IRS Takes Action?
Legally, there is no definite number of years you can get away with not filing before the IRS will require you to file returns. According to IRS rules:
There’s no penalty for failure to file if you’re due a refund. Generally, you must file your return within 3 years from the date the return was due (including extensions) to get that refund. After 3 years, your refund will be lost.
So the IRS can hold you to filing returns to claim refunds for up to the past 3 years. Beyond getting refunds, the IRS does not have a specific number of non-filing years that triggers enforcement action. However, if you stop filing returns for several years in a row, your case could potentially be selected for review and further IRS action.
Statute of Limitations
The IRS statute of limitations provides a timeframe for how far back taxes can be assessed on late or amended returns. The general statute of limitations periods are:
- 3 years – The IRS can go back 3 years from the date you actually file a delinquent return to assess income taxes and penalties.
- 6 years – The IRS has 6 years to assess taxes if you underreported income by more than 25% of the gross income reported.
- No limit – There is no limitation if you never file a return or file a fraudulent return.
So the failure to file returns indefinitely can open up your account to IRS scrutiny with no time limit. However, if you do ultimately file late returns, the statute expiration gives a cutoff point for taxes and penalties assessed.
When Filing Resumes After Multiple Years
If you go several consecutive years without filing, you will have some considerations when picking back up with filing:
- You will need to file returns for all previous years missed, going back as far as those statute of limitation rules allow.
- Your returns must include all required forms like W-2s, 1099s, and schedules to report your full income situation.
- You will owe income taxes and interest charges on any tax debts across the missing returns.
- Penalties will apply to all late returns, starting at 5% per month up to 25% of unpaid taxes.
- You lose the ability to claim refunds on any returns filed more than 3 years late.
Essentially, you need to fully report all details as if you had filed on time. No income or deductions can be left off the late returns. The IRS can go back and assess taxes, penalties, and interest once you start filing again.
Strategies to Legally Avoid Filing
If you want to take advantage of non-filing years, here are some tips:
- Ensure you check the filing requirements each year and remain under the thresholds.
- Watch your income sources to track any reported to the IRS that could flag your non-filing.
- Consider filing for any years you may get a refund to avoid losing out.
- Have a plan to resume compliant filing after a certain period of non-filing.
- Be prepared for taxes, interest, and penalties when you pick back up filing.
With some caution, you can avoid filing returns for a period before needing to become current.
Conclusion
Legally, there is no absolute limit on consecutive years without filing income tax returns. The IRS can require filing for the past 3 years to claim refunds. But no specific duration triggers enforcement action. With careful review of filing requirements and income sources each year, you may find you do not have to file and can avoid filing taxes for multiple years. However, penalties and interest can still hit once you resume filing. So tread carefully when planning any extended non-filing of tax returns and be ready to become compliant again.