Multiple year filing stratagy sought

[Treasur2]

A new client did not file in 2014, 2015 nor 2016 yet.

$1,300 refund for 2014, balance due $1,100 for 2015. Late filing of 2016 to do, plus balance due of $850. Client can't afford more than $50 month.

A Very common scenario I know for you more experienced than I, but....

Will IRS automatically apply the refund of year 2014 to 2015?......vs. sending refund check and then silly letter asking for payment on 2015. Would it be smart to mail 2014, 2015 in the same envelope vs. usual strategy of different envelopes?

Yes, I know late filings, interest, penalties on balance due will be calculated on 2015,16. 2015 bal due may not be completly covered by 2014 after 2015 cals are done.

I will get TP on the payment plan, just would like to do it efficiently vs. responding to one or more letters. Would also be great to get first-time abatement advice for first time offender under above circumstances.

I see this as classic basic 1040, non-filer logistics question, not a tax question. I just haven't had opportunity to deal with yet personnaly.

[Snaggletooth]

One at a time

If you don't manage the returns correctly, the IRS will in fact mail a refund from 2014 and then start beating up on him for 2015. Here is what to do.

File the 2014 first, in a separate envelope. You cannot e-file a return from a prior year. Your software should allow you to apply the overpayment to 2015. Do that.

A few days later, in a separate envelope, file the 2015 return, and apply the overpayment from 2014. If your numbers are correct, there should still be an overpayment, which you can apply to 2016.

Electronically file the 2016 return and apply the 2015 overpayment. If your numbers are correct, there should be a small liability remaining even after applying the 2015 overpayment.

This way you are only having to deal with the "net" underpayment of a few hundred dollars. If he can't come up with the money there will be a fee of over $100 to pay in installments.

[Gene V]

You cannot e-file a return from a prior year. .

I agree with Snaggletooth--except my software allowed me to file 2014 and 2015 return electronically. Got accepted by Federal and State.

[taxea]

This post was answered for you on the ProSeries site.

[TAXNJ]

This post was answered for you on the ProSeries site.

How did that happen when posted on this site?

[spanel]

If you don't manage the returns correctly, the IRS will in fact mail a refund from 2014 and then start beating up on him for 2015. Here is what to do.

File the 2014 first, in a separate envelope. You cannot e-file a return from a prior year. Your software should allow you to apply the overpayment to 2015. Do that.

A few days later, in a separate envelope, file the 2015 return, and apply the overpayment from 2014. If your numbers are correct, there should still be an overpayment, which you can apply to 2016.

Electronically file the 2016 return and apply the 2015 overpayment. If your numbers are correct, there should be a small liability remaining even after applying the 2015 overpayment.

This way you are only having to deal with the "net" underpayment of a few hundred dollars. If he can't come up with the money there will be a fee of over $100 to pay in installments.

Agree with everything except you can efile 2014/2015/2016 or in this Case All the returns.

Chris

[Lion]

E-file current and two prior year returns.

For lowest set-up fee for an Installment Agreement, apply online and use direct debit. That gets the fee down around $50 or so.