Catching up on several years of business returns sounds enormous, but it is a process with a sensible order. The key is that each year is its own return, prepared under that year's rules, and the years depend on each other.
Why the order matters
Years are linked. A net operating loss, depreciation schedule, or owner basis from an earlier year carries into later ones. Preparing the latest year first can produce wrong carryovers that need amending. File the oldest year first, then move forward one year at a time.
What you need for each year
- Bank, credit card, and loan statements for all twelve months.
- Sales records, invoices, and payment processor reports.
- Payroll reports and Forms W-2, 941, and 940 if you had employees.
- Asset purchases and any prior depreciation schedules.
- Information returns you received, such as Forms 1099-NEC, 1099-K, or K-1.
- Prior-year returns, if any, and IRS transcripts showing what the IRS has on file.
Use the right forms for the right year
Tax forms and rules change from year to year, so a 2022 return must be prepared on the 2022 form with 2022 rules. The IRS provides prior-year forms and instructions for download. Do not reuse a current-year form for an earlier year.
The practical process
- 1Pull IRS transcripts for each year to see what the IRS already has, including any substitute return.
- 2Reconcile the books year by year. See our guide to what to do when your books are months behind.
- 3Prepare the oldest return, check it against the transcript data, and file it.
- 4Repeat for each following year, carrying forward balances and elections.
- 5File state returns for the same years, since state penalties run separately.
- 6Address balances due through a payment plan and request penalty relief once you are current.
A note on refunds and time limits
If a late return shows a refund, there is generally a limited window to claim it. In general you must claim a refund within three years of the original due date of the return, so a very old refund may be lost. The rules are specific, so confirm the dates for each year.
E-filing and mailing
Current-year e-filing is routine, but prior-year returns often must be filed on paper depending on the year and form. Check the current IRS instructions for the year you are filing before assuming either option is available.
Do owners need to catch up personal returns too?
Usually yes. For S corporations and partnerships, income passes through to the owners' personal returns, so late entity returns often mean late personal returns as well. Filing them in sync prevents mismatches the IRS can flag.
Multi-year filings are a core part of our tax preparation service. For the bigger picture, read behind on business taxes, then discuss your multi-year filing needs. Outcomes depend on your records and facts.
