Filing Taxes: What to Do When You Owe Back Taxes

As the tax deadline nears, many Americans have either begun to file or have filed their income tax returns, and are now only waiting for their refund. Yet, some taxpayers were surprised to find that they will owe back taxes this year.

This dilemma leads many taxpayers to the common misconception that if they do not file their return, the IRS will not know they owe back taxes, buying them time to figure out what their options are.

Wrong. The IRS will eventually file your tax return for you, which may result in an even higher tax debt. Furthermore, having back taxes is not illegal, but failing to file your taxes is.

Taxpayers who find they will owe back taxes this year have two paths they can take. The first path would be to file your income taxes and let the IRS assess the amount you owe in back taxes, and then locate professional tax debt help for an affordable solution.

The second path is only for taxpayers who believe they will be able to pay a large amount or their entire tax debt later in the year. Taxpayers can file an Extension of Time to File, which allows them up to an extra 6 months to file their income tax return.

However, the IRS still expects taxpayers to estimate their tax liability and pay any back taxes owed. If a taxpayer fails to do so, the IRS assesses a .5 percent penalty each month the back taxes go unpaid. This option is only viable if the taxpayer is expecting to pay their tax debt in full (by way of a legal settlement, inheritance, etc.) later in the year and can afford to take on additional penalties and interest.

For the majority of taxpayers who owe back taxes this year, the first path is your best option to ensure you will not incur any additional penalties and interest. If you have filed your return and owe back taxes, or have multiple years of unfiled returns, you should seek the services of a tax debt professional to resolve your back taxes.

Call (888) 415-1337 today to find a solution to your back taxes!

Labels: , ,