If you have procrastinated and not filed one or more of your tax returns, you can still file and should do so immediately. Not filing your taxes can lead to a huge slew of issues including tax penalties and interest fees, forfeiture of any refund you are owed and you can even have a tax levy placed on your property, bank account or wages. The sooner you take action the better off you will be.
The first thing you will need to do is to gather all of the documentation you will need to file your back tax return(s). This will include your proof of income as well as any documentation needed for tax write off’s. If you are missing your proof of income (W-2’s and 1099’s) you can contact the IRS and they should be able to get the information for you, as long as it was properly reported to them.
The next step will be to gather the tax forms for the years you are missing. If you plan to do the tax return on your own you can now go ahead and fill out the forms. Many people however, find it best when they have back tax returns to file, to work with a tax preparer that specializes in filing back taxes. While you will still have to do the leg work in finding missing tax information, they will be able to properly prepare and help you file your back returns. Make sure when you mail your back tax returns that you put each year’s paperwork in a separate envelope. Before mailing it is a good idea to make a copy and always send the mail certified with a return receipt. This will be your proof that your tax paperwork was received.
Many people do not file because they owe money and have no way of paying. Even if you owe money and can’t pay it, you still need to file. Not filing will only increase penalties and make your bill higher. You do have options if you cannot pay.
An offer of compromise is one option. If your bill is truly out of your reach, and the IRS can verify by looking at your income and assets that they would not be able to collect your bill in full, they can reduce the amount you owe. The process in receiving an offer in compromise can be tricky and many people choose to work with a tax specialist to help them. If you are approved you will usually owe a small percentage of your original bill, and can pay it in one lump sum or in payments over time.
Another option, if you are not eligible for an offer in compromise, is to set up a payment plan with the IRS. You can contact the IRS directly and they can help you set up a monthly payment plan within your budget to pay off your tax bill.
While the above mentioned options are a great way to catch up on what you owe, it is still best to plan ahead and pay your tax bill on time, in one lump sum. Once you are caught up on filing your returns it is now time to look ahead and make changes that will allow you to be better prepared for your next return.
This guest post from Taxdebthelp.com, a site designed to help with tax debt. If you are in need of IRS debt help, this site can help you figure out what your options are.