Filing Back Taxes
Because of the current times and unexpected unemployment many people are filing back taxes that never thought they would. They didnt plan on losing their job and not being able to pay back taxes. Well the IRS can be scary, there is ways to deal with them when you owe back taxes and must pay and file back tax returns. This article will ease your anxiety and hopefully provide some help during this time.
If you aren’t filing back taxes and the IRS is pressuring you to file and pay your owed back taxes you have some different options available to you. Some circumstances are tougher than others, so as a start visit IRS.gov which could answer some of your initial questions. Just don’t follow no course of action since it’ll only cause additional penalties and interest and potential liens or levies. The IRS has announced they are going to be more understanding with folks facing economic problems since the economy has caused higher loss of jobs. This should provide some relief, but doesn’t mean to flat out ignore their letters regarding filing back taxes. The more up front you are at the beginning regarding paying and file your back taxes the more they will work with you.
If you do not file back taxes returns, the Internal Revenue Service may perhaps quickly file a tax return for you with just the most basic information they have in their computers to figure out the back taxes you owe. If this happens, you should still file a tax return. They automate the process and can miss all the deduction you are entitled. If your tax bill looks higher then it should be you should hire a CPA or tax professional. We can help you find an affordable one to help you.
To get started with your back tax filing and payment if you owe back taxes you should first collect your income tax documentation. If you cannot find this paperwork you are able to contact a former employer and financial institution to get these forms. If you can’t find any of these documents the IRS will let you estimate your prior earnings using some of their tools.
Federal tax returns that are filed past the extension due tax, which is October 15, must be signed and sent in instead of e-filed. The address to send to depends on where you live and you can find that information on their website. If you do not want to deal with all the “how to’s” with regard to filing and paying back taxes, it might be best to hire a CPA. It is important to file even if you cant pay the back taxes. This shows you are up front and hopefully if you havent hid to long they will reason with you.
If you cannot pay the Internal Revenue Service in full you should look into their month to month payment options which can be found on their website. Again, just be up front and they will only charge nominal interest and you should be ok. In the event you are obligated to repay the Internal Revenue Service $10,000 bucks or less, it might approve you for a guaranteed payment settlement because of this type of repayment strategy. Just online and apply.
If you are obligated to pay the Internal Revenue Service greater than $10,000 and less than $25,000, it would likly to be approved for a streamlined payment deal. It can be coined “streamlined” since no fiscal disclosure is needed. This agreement usually lasts 5 years with the minimum regular monthly fee is calculated using the overall sum you are obligated to pay and then dividing it by 60 months. The form to use is Form 9465 and you can send it to the Internal Revenue Service along with your tax return. Be sure to add the user fee with your initial month’s fee.
Should you owe more than $25,000 you might want to apply for the verified economic payment agreement. This version of a Installment Settlement has to be “verified” by the IRS because you will need to have you disclose your current assets, earnings and other financial information on a Collection Information Statement. It is generally more difficult to obtain this acceptance by the IRS versus the other Agreements and for that reason you probably should consider getting some professional help. In some instances, the IRS might call for you to liquidate assets ahead of this deal being accepted.
If you are having trouble making the minimum payments and are obligated to repay no less than $10,000 of tax debt, you might need to look into a Partial Payment Installment Arrangement. This allows you to pay your back taxes over longer periods of time at a discount. What happens is a portion of your debt dros off as a result of the Statue of Collections. This agreement is not easy or effortless to obtain, and like the Verified Payment Settlement, its a good idea to go this route with a specialist.
Last but not least, there is the Offer in Compromise option which will likely only be satisfying a portion of your respective outstanding liabilities. To have this accepted by the IRS you should prove that there is doubt the IRS will ever receive the full amount of back taxes owed, or if all was collected it would lead to or cause personal hardship. You may perhaps see radio ads and mass commercials on Offers In Compromise, but buyer beware. This cost settlement is possible, but keep in mind that the IRS only accepts 10 to 15 percent of this type of offer.
Just keep in mind that it’s best to file your tax returns as soon as possible even if you cant pay. That way you aren’t hiding and in this economy they will try and work with you to make filing back taxes as easy as possible.