Paying Back Taxes

By diamondcpas General, Taxes Comments Off on Paying Back Taxes

There are few phrases that can induce more anxiety than “back taxes.” And there is a good reason for that. Technically speaking, back taxes are taxes that were unpaid in the year they were due. They can be owed on the federal, state, and/or local level. Regardless of where they are owed – back taxes should be taken care of as quickly as possible. Penalties and interest accumulate quickly, and the IRS is able to collect on unpaid taxes for up to 10 years. Simply put, the sooner you take care of an unpaid tax bill, the better off you’ll be. Here are a few important tips to help you deal with back taxes.

Act Quickly

As soon as you realize you owe back taxes – you need to react. Do not wait it out and hope that the problem will go away, this problem will only get bigger.

Gather Information

Find your relevant W-2s, 1099s, and mortgage interest documents. If you’re unsure or can’t find these, contact the IRS to request a transcript of your wages and income.

Contact the IRS

IRS customer service agents are available to explain the process and help you figure out what you owe. You can also work with the IRS to negotiate a payment plan if you cannot pay the entire tax bill at once. Finally, you can check if you qualify for a program called “Offer in Compromise,” which is designed for taxpayers who are not able to pay their tax debt. If you qualify – you can make an offer to pay a lower amount than what is owed. Contact the IRS or a certified accountant to determine if you qualify.

Consider Professional Help

A qualified accountant can help you navigate the maze of back taxes and even represent you with the IRS. A certified professional will have the expertise to know all of your options as well as ensure that you are not paying more than you should and that you are not compounding any previous mistakes.

Use the Proper Year’s Tax Return Forms and Mail

If you are filing your tax return late, you must file using the original forms pertaining to the year in which you owe the taxes. In other words, if you did not file your taxes in the year 2015 – the 2017 form will not work. You must locate and complete the forms for the year 2015. Prior year forms can be found on the IRS website at www.IRS.gov.

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