What are Back Taxes?
What makes people more nervous than filing their taxes for the year? Not filing for taxes and worrying about the IRS finding out. They are perhaps afraid of what happens when you owe back taxes. The IRS has 10 years to collect the taxes that you owe, so it’s not something that will go away quickly if you lay low. Instead it’s one of those things that is best tackled by handling it as quickly as possible.
The first step if you haven’t already is filing your taxes and submitting them to the IRS, and luckily we’ve got a step-by-step guide for you on how to file back taxes. You will also need to make sure that you’ve completed the your filing using the proper year’s form. You can either use software like TurboTax or go directly to the IRS’ site and download the forms.
When filing your back taxes, send them through certified mail to get confirmation that the IRS received your documents.
Consequences of Not Paying Back Taxes
There are some people that fear filing their taxes late and try to avoid it, but there are serious consequences to not paying your taxes. The IRS will charge you 5% interest each month that you are late with a maximum of 25%.
The good news is that the IRS in most cases have customer service agents who can assist you in getting everything straightened out in a reasonable fashion. I used them to straighten out a miscommunication with my taxes this year. It was resolved fairly quickly.
Contact the IRS and Get Help with Back Taxes
If you’re not sure if you owe back taxes, it would be wise to check with the IRS (800-829-1040) to get the amount owed. If you do owe taxes, you may be surprised to find out that the IRS in many cases will work out a payment plan with you.
You have several payment options with the IRS in getting your taxes straight. Use whatever is best for your own financial situation:
- Credit card
- Money Order
- Electronic Withdrawal
If you can not afford to pay the IRS what you owe, you may want to look into Offer in Compromise with them. If the IRS analyzes your financial circumstances and see that you can not make the payments, they may be willing to settle for a smaller amount.
Thoughts on Back Taxes
One advantage of using software like TurboTax is the expertise and tax community behind it. You can ask questions about your specific tax situation and feel confident about submitting your taxes.
I’m curious – have you ever had to pay back taxes? How did you resolve it?