How to File Back Taxes and How to Resolve the Problem

The Internal Revenue Service (IRS) requires that you file a tax return each year that your income is greater than your standard deduction. In other words, if you are generated income or revenue you need to file a tax return with IRS. Many taxpayers do not comply with filing a return even when it is necessary.  Here is how to file back taxes.

General Steps on How to File Back Taxes

Step 1: Gather Information about Income

Get the details of your income for the time you are required to present. You will need your previous W-2 and 1099(’s) for those years. You can ask the IRS for an alternative by filing an IRS Form 4852 if you are unable to get W-2 from your company and you need it.

If you deal with capital assets during the period, you also have to declare this income. However, if you aim at stopping accrued interest and fines, prior to getting a copy of your Form W-2 or 1099, you can make a payment of tax after estimating your income.

Step 2: Determine Deductions and Exemptions

Decrease your tax account with exemptions and deductions. Simply because you are filing your return overdue does not mean you will lose the deductions and exemptions you may have taken. If you aim at itemizing your deductions, you are required to get documents that will help you with that.

You can claim the standard deductions for the period if you don’t have the necessary documentation. You can also reduce your tax base with exemptions for dependents that you were eligible to claim in previous years.

Step 3: Obtain the Appropriate Tax Forms

Get the correct forms and instructions for the specific years in question. Your overdue statements must be submitted on the original tax forms. You can access tax forms from previous years by contacting the IRS. Do not make the mistake of using tax forms of current years or you may end up making the return statement again.

Step 4: Complete the Tax Forms

Fill out the necessary forms according to the instructions on those forms. Since tax laws change from year to year, it is important that you use the corresponding instructions for the fiscal year for which you file a return. Apart from the confusion, it will cause, following the wrong instructions can cause you to pay more or less the amount of taxes you owe.

Step 5: Submit Your Tax Return

Send in your tax return, and all documentation to the address indicated on the instructions. Sending your statement to the wrong address can delay the time it takes for the IRS to process it. To get results easier and faster, you can complete your previous year’s statement using a tax e-file software.

Tax AttorneysAdvice from Tax Attorneys

Make sure you make a copy of all the documents you send to the IRS. Documents are lost from time to time, and you may need a backup copy in case you are audited. It is important to contact a tax attorney for legal advice on how to file back taxes.

What You Should Do If You Can’t Afford To Pay the Back Taxes

If you owe taxes but cannot pay the IRS, consider filing Form 9465 (Installment Agreement Request) with your tax return to request an installment payment plan. In certain situations, the IRS cannot deny a request for installment payment if you owe less than $10,000. That said, you must pay for everything you can when you file your tax return. Even if they approve your payment request in installments, you will be charged interest and penalties for late payment of taxes that are unpaid at the due date. You can avoid notices and other IRS collection actions. A Federal Tax Debt Lien could be issued so make sure you are proactive. If you do not know how to file back taxes you should speak to our tax specialist for immediate help.

Other Alternative for Back Tax Taxpayers

If you owe back taxes, here are a few tax debt relief programs that you can apply:

  • The plan installment payment (Installment Agreement) is available for people who cannot pay their total tax debt at once. This program allows people to pay small monthly payments until they finish paying all the debt.
  • Under the Fresh Start initiative, the IRS raised the limit amount of tax debts for simplified installment payment plans from $25,000 to $50,000 and extended the repayment period from five to six years. Taxpayers who owe less than $50,000 can submit their application on the IRS website and do not have to complete the Collection Information Declaration (form 433-A, form 433-B, or form 433-F ) of the IRS.
  • A transaction offer (Offer in Compromise or OIC) allows taxpayers to permanently resolve their tax debt by paying less than the amount owed. The offer in transaction or OIC is an important tool to help people, but only applies in limited circumstances; this is an option that is available only to those taxpayers who have exhausted the other payment options.
  • The IRS extended the offer of transaction offering to help more taxpayers with payment problems under its Fresh Start initiative. Nevertheless, the IRS is going to reject any present of this type if it considers that the taxpayer can pay his debt or using an installment payment plan or as a lump sum.

Still need help? Talk to our tax lawyers today. We solve back tax problems!

How to Resolve a Delinquent Tax Return

Delinquent tax return also referred to as late tax return refers to a tax that is unpaid after the payment due date which in order words might mean a late in filling or payment of tax. In the eyes of IRS and federal government a delinquent tax return is defined as income tax return having a US mail postmark after April 15th or the latest tax filing due date, if an extension was granted, a delinquent income tax return is defined as an income tax return with a US mail postmark after due date of that extension. Usually, a penalty is attached to a delinquent tax. The power, jurisdiction, and authority to collect all delinquent taxes is vested in a state tax commission. Internal revenue service (IRS) policies stated that the enforcement period for delinquent return and filling requirements is not to be more than six years.

However, the extent to which delinquent procedure will enforce will depend upon the facts and circumstances of each case and by reference to factors ensuring evenhanded administration of staffing and other IRS resources. The IRS prepares the return based on the information it has from employers, banks, financial institutions and other payers of the person involved. The IRS does not take kindly to people who do not pay their taxes on time and the same holds for people who do not file a return.

What If You Don’t Response to a Delinquent Tax Return?

No matter how overdue your returns are and no matter what your excuses may be, you must file your taxes. If you don’t file a required tax return by the due date the internal revenue service (IRS) will charge you a 5% per month penalty for failing to file. If you owe taxes on the return, you will be charged a 0.5% per month failure to pay penalty. interest will also accrue on any unpaid balance from the day the return was due until the date you will pay the tax in full. The IRS Can also file a return for you called a substitute for return (SFR). So if you have a refund date, you must file your tax return within three years of the due date of the return or you will lose your refund.

Ways to Resolve a Delinquent Tax Return

The IRS can be very intimating in most cases as on receiving notice from them will raise anyone’s blood pressure. To understand how to deal with it, it is important to understand some steps to be followed to get some tax debt relief. The very important and first step to take is to get help from a licensed tax professional which could be a tax lawyer or a tax attorney, they are pros in this field and know the tax law. They can provide you with tax debt relief which can save you from the intimidation of IRS which can make you start thinking you have no choice than to pay the amount of your tax immediately on receiving their notice.

Also consulting with a tax lawyer might make you understand your rights and options and will make you realize you can file your taxes even if you can’t pay at the moment. This will potentially save you from IRS collection or the IRS filing your taxes for you. As said by Zimmelman, the owner of Westwood tax and consulting, a New York-based accounting firm, “The penalty for late filing is 5 percent of the unpaid taxes for each month that the tax return is late.” Your tax attorney might assist you in requesting an extension of time and can also assist you in setting up an installment agreement with the IRS. With the help of your tax attorney, the IRS may set up an installment agreement for you if your combined tax penalties and interest is less than a fixed amount of money. Making an offer in compromise can also be a tax debt relief to save you of the challenge of the delinquent tax return. Zimmerman also said, “if you can prove that you cannot afford to pay the taxes, the internal revenue service might be willing to compromise and reduce your balance”. An important aspect that must not be left out is frequent communication and record-keeping which is also important in dealing with the delinquent tax return. This can be streamlined if a tax debt relief professional is on your side.

Resolve Delinquent Tax Return is Very Important

It is very important to deal directly with a tax attorney to help you until you get the delinquent tax return issue resolved to avoid possible consequences such as potential loss of tax credit as if you qualify for. One must also be aware that if you fail to file a return, the Internal Revenue Service could start some serious collection activities which typically includes tax liens, wage garnishment, bank levies, cooperate responsible person assessment, license and permit revocations, referrals to a private collection agency and other types of property seizures. If you need help, don’t hesitate to contact us today. The consultation is FREE!