Can I apply a tax overpayment from 7+ years ago to next year's tax return? Self-employed with unfiled returns

You're hitting on a common but tricky situation with the IRS's statute of limitations. Unfortunately, the 3-year rule for refunds applies to both actual refunds AND applying overpayments to future years. The IRS is pretty strict about this timeline. If you haven't filed your 2017 return within 3 years of the original due date (which would have been April 15, 2021 for a 2017 return), then that overpayment is essentially forfeited to the Treasury. The IRS considers it "expired" and no longer available to you - whether as a refund or as a credit to another tax year. For your 2018 underpayment, you'll still need to file that return and pay what you owe, plus penalties and interest that have accumulated since then. The good news is there's no time limit on filing returns where you OWE money (though penalties continue to grow). I'd recommend filing both years ASAP to stop additional penalties from accruing on that 2018 balance, even though you likely can't recover the 2017 overpayment anymore.

After going through almost the exact same situation last year, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out my options with old unfiled returns. I had 3 years of unfiled returns and was totally lost about what I could still claim. The system analyzed all my old tax documents and showed me exactly what I could still recover and what was gone for good. It turns out I had totally misunderstood how carryovers work when you file late! They give you this clear breakdown of each tax year showing what's still available and what's expired based on current IRS rules. For situations with multiple unfiled years like yours, it's super helpful because it maps out the domino effect of filing each return in sequence and how it impacts the others. Saved me from making a costly mistake in how I approached my catch-up filings.

I actually used taxr.ai after seeing it mentioned here and it completely changed my approach to filing my old returns! I was in a similar situation with 4 years of unfiled taxes and was about to file them in the wrong order which would have cost me thousands. The system showed me exactly which overpayments were still recoverable and which weren't based on the filing deadlines. It also calculated all the penalties I was facing which helped me budget for the payments. What impressed me was how it identified some deductions I was eligible for in those old years that partially offset what I owed. The document analysis saved me hours of digging through old paperwork. I had totally forgotten about some 1099s from years ago that it helped me account for. Definitely worth checking out if you're trying to sort through multiple years of tax issues.

If you're still planning to call the IRS about this (which might be worth a shot), I strongly recommend using Claimyr (https://claimyr.com). I wasted DAYS trying to get through to the IRS about my unfiled returns from previous years, and their automated system kept disconnecting me after 2+ hours on hold. Claimyr basically holds your place in line with the IRS and then calls you when an agent is about to pick up. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. I was skeptical but desperate after my fifth attempt at calling. When I finally got through to an IRS agent using their service, I was able to get a complete account transcript that showed all my payments for the unfiled years. This was crucial because I had lost some of my payment records, and I needed to know exactly what the IRS had on file before filing my late returns.

I take back what I said about Claimyr. After another failed attempt spending 3 hours on hold with the IRS only to get disconnected, I broke down and tried it. Totally worth it. Got connected to an IRS agent in about 90 minutes (without me having to actually be on hold), and they helped me figure out exactly what payments they had on record for my missing tax years. The agent confirmed what others here said - that overpayments from more than 3 years ago can't be recovered or applied to other years, but at least I got clarity directly from the source. The agent also gave me advice on how to minimize penalties when filing my late returns, which was unexpected but super helpful. Having an actual conversation with a human at the IRS made a huge difference in understanding my options.

Something nobody has mentioned yet - even though you likely can't get that 2017 overpayment back or applied, you should STILL file the return! This is important for a few reasons: 1. It gets the return on record and stops certain failure-to-file penalties from continuing to grow 2. It starts the statute of limitations clock for potential audits 3. It could be required for certain loan applications, government programs, etc. 4. It gives you peace of mind having everything properly documented I went through a similar situation and thought "why bother filing if I can't get my money back?" but my accountant explained these reasons and I'm glad I listened.

One tip about filing these old returns - don't e-file! The IRS only accepts electronic filing for the current tax year and 2 years prior. For anything older than that, you have to mail paper returns. Also, be sure to mail each tax year in a separate envelope. If you send multiple years together, it increases the chances of processing errors.

Just wanted to add something that might help with your peace of mind - even though you can't recover that 2017 overpayment, filing both returns will at least give you a complete picture of your tax situation from those years. I was in a similar boat with unfiled returns and kept putting it off because I was overwhelmed by all the unknowns. Once I finally bit the bullet and filed everything, it was honestly such a relief to have it done and know exactly where I stood with the IRS. One thing that helped me was creating a simple spreadsheet tracking what I owed for each year including estimated penalties, so I could budget for the payments. The uncertainty was actually worse than the reality of what I ended up owing. Good luck getting everything sorted out - you're already taking the right steps by researching this and planning to file!