Landmark Tax Group

Tax Tips

How to File Back Taxes

If you owe back taxes, you are not alone. It is estimated that roughly 8.2 million Americans owe upwards of $83 billion in back taxes. Back taxes, simply unpaid personal or business taxes at the federal, state and/or local levels, are a serious issue. If you are one of the 8.2 million Americans who owe back taxes, it’s important you resolve the issue quickly.

Why Do People Owe Back Taxes

The large number of people with back taxes obviously indicates a problem. People can be behind on their taxes for a number of reasons. One of the most common reasons is the overwhelming amount of paperwork. Many individuals find themselves in an already stressful situation and they put off completing the necessary tax paperwork until it is too late. Although this mistake is common, there is no way to avoid filing taxes if you live and earn an income in the United States above the minimum threshold.

Another reason people owe back taxes is based on life events. Perhaps they’re experiencing a divorce, illness, loss of job or other life-altering event. These life discrepancies can be extremely overwhelming and lead people to completely disregard or forget to properly file tax returns. The idea of opening a letter from the IRS or dealing with tax concerns is often too much for some people to bear thus leading them not to file at all.

People also owe back taxes because they underwithhold. If you do not withhold enough money for taxes from each paycheck, you will likely owe the IRS money. Additionally, if you claim excessive exemptions on your tax forms, it will likely trigger underwithholding. If you think you may have incorrectly completed your IRS Form W-4, you can file a new one at any time.

Another common reason people owe back taxes is miscalculated tax payments. If you’re a business owner or you’re self-employed, you pay taxes monthly or quarterly. These are estimated payments based on your income. If you miscalculate your payments or fail to make your payments throughout the year, you’re likely to get a huge tax bill as well as an underpayment penalty.

If you owe back taxes for any of the reasons listed above or otherwise, the IRS will let you know. The IRS will typically contact you letting you know the amount you owe. In some cases, this is a matter of reporting an error; however, do not dismiss any documentation from the IRS. If you do not understand the information sent to you by the IRS, contact a tax professional immediately so the issue does not escalate.

What to Do If You Owe

If you’re certain you do in fact owe back taxes, there are a number of steps you should take to resolve the issues.

First, you should file your tax returns for the missing years as quickly as possible to avoid additional penalties and protect yourself from wage garnishments, bank levies, asset seizures and tax liens. Start by gathering all the important documentation. This includes W-2’s and 1099’s for all the years you failed to file your returns. If you intend on claiming deductions, you will also need receipts and proper documentation.

Once you have gathered the important documents, you’ll need to locate all missing paperwork. If you’re missing employment based documents, you’ll need to contact your employer. They will have a record of past income information. If you need information from the IRS, you will need to request those documents directly from the IRS.

In addition to past forms and documents, you’ll need to file your back taxes by hand using a specific form for that tax year. Once you’ve collected all the documents, you will submit your paperwork to the IRS. After the IRS has received the forms, the responsibility becomes yours. You are fully responsible for paying what is owed as well as any interest that has occurred or penalties that have resulted. Typically, it takes the IRS six weeks to file past due tax returns.

Payment Options

As previously mentioned, owing back taxes can be very stressful. When you receive notification that you owe the IRS a large sum of money, it can become easy to feel overwhelmed. Fortunately, the IRS does provide payment options.

The IRS will typically allow you a two to four-month window to pay your bill in full. If you are able to pay your back taxes during this time frame, contact the IRS to schedule the payment plan. There is no additional charge for this option.

Other payment options such as installment agreements and offer in compromise do exist; however, they require much more time and are not easy to obtain.

Other Resources

If you have failed to file your taxes or if you know you owe back taxes, call a professional to help. At Landmark Tax Group, we are dedicated to helping you find the best strategy when it comes to back taxes. We’ve helped  numerous taxpayers just like you. Here’s what one of our clients, Pat, had to say about the relief working with us brought him:

“I contacted Landmark Tax Group because I owed thousands in tax liabilities and was being hounded by the IRS and FTB [California Franchise Tax Board] with threats of wage garnishments.  A wage garnishment was put in place which would have taken 25% of my income.  I could not afford a wage garnishment because I am the main breadwinner and my family depends on my income to maintain the basics, such as rent and food.  I had many sleepless nights and was overwhelmed with the thought of dealing with these agencies.

From the very beginning, Landmark Tax Group (“LTG”) took control of the situation.  I appointed LTG as my authorized representative, and from that moment forward LTG communicated with both agencies on my behalf.  Not once, did I have to call LTG for an update as they kept me updated on the progress of all negotiations with both agencies.  I could not have been more pleased with the results I achieved as a result of LTG’s efforts.  I honestly felt LTG listened to me and understood my frustrations.  Thanks to LTG I have peace of mind, and can move forward without constantly looking over my shoulder.  On a scale from 1-10, 10 being highest, I give LTG a 10+.”  – Pat N.

If you are in need of IRS back taxes help, contact us today to request a FREE consultation with our ex-IRS agents here or call us now at (714) 382-6780.