To finally be free from stress caused by your tax problems, you would need to first file all your back taxes. This is true even if you already missed returns for a couple of years. Some people tend to put it off after missing one return, then eventually failing to file a couple of years more. This only gets them into more trouble instead of what they expect from running away. Because whatever you do, the IRS will come to you and collect the money. And penalties and interest will just pile up making it harder to achieve resolution. It’s time to get back on track and to reorganize your finances. You can start with filing your back taxes even if you cannot pay the possible tax amount in full. But how do you start filing your back taxes? Just the thought of it might be intimidating, but with time, effort, and help from a tax consultant, you can achieve the peace of mind you certainly deserve. Follow these steps to get you back on your feet.
Gather All Your Tax Documents
You need to get your tax records ready. Your copy of your last tax return, W-2s and other tax documents needed for the years that you have not filed, receipts or other supporting records for your deductions, and 1099s. If you don’t have necessary forms, you can call the IRS by dialing 1-800-829-1040.
Prepare your Tax Return
Using all the documents that you have gathered, you now have to prepare your returns for each year that you have missed. This can be a tedious process. Ideally, you can hire a tax expert to sort this out for you. Tax professional knows their way around and might be able to secure more deductions or write-offs. Also, since tax law changes every now and then, you might need to follow the rules for each and every year that you will file. Professionals are aware of this and can prevent you from getting into a deeper hole.
Be Wary Of Your Refunds
Even if you have filed your returns late, it is still possible to get refunds if you do not owe taxes. However, you only have three years to claim the refund and then it’s gone. Be wary of the dates, possible refunds that you can get, and plan ahead for the next tax season. This way, you can prevent the IRS from forfeiting your refunds.
Pay Your Debts
The main reason why you’re doing all this is to comply with the tax law. Now, after you prepare and file your returns, pay all the tax debt that you owe. Be prepared for penalties, interests and other consequences of your failure to file it on time. If you cannot pay the tax in full, don’t despair. You still did a good job with filing your taxes and you have now opened doors of opportunities to fix your problems. With your return being filed, you can now talk to the IRS to get into an installment agreement plan, offer in compromise or other abatement options available for you.
Now that you’re back on track, make sure you will never get into the same trouble again. Take a look at your finances, look for ways on how to reduce your tax, look for options to pay for your taxes if you still expect to owe, and to budget your money accordingly.
Filing back taxes can disguise itself as a nightmare. But in reality, it is not that hard to overcome this problem. With the help and guidance of an experienced tax professional, you can get back on your feet quickly. This is not only to solve your current problems, but to avoid the same roadblocks that you might encounter in the future.