Penalties for failing to file and pay taxes include a hefty fine and even time in prison.If you haven't filed taxes in a while, you will want to get up-to-date as soon as possible.You can file back taxes by gathering the necessary information and paperwork, and forwarding your completed tax forms to the IRS.
Step 1: You should understand the benefits of filing back taxes.
Even if you can't pay your taxes in full, there are many benefits to filing them as soon as possible.The benefits are always greater than the costs.Interest charges, late fees, and penalties can be reduced with early filing and payment.If the return is not filed within 3 years, the tax refunds will be lost.This can result in a large loss of money.If the IRS sees that one or more tax returns are past due, they hold tax refunds.Since the IRS requires reported income to award these credits, if you are self-employed, you will not receive credits toward Social Security Retirement or any disability benefits.
Step 2: Determine which years need to be filed.
List the tax years in which you have copies of payments or refunds.This will help you narrow down the years you need to file.If you can't determine which years you have filed taxes for, you should contact the IRS.Ask to speak to a representative if you visit the IRS website or call directly.
Step 3: There are old tax documents to look for.
These documents are needed to file.It is possible to contact your old company for income information, but it is not certain that they will have the information on record.Every year at the end of the year, you receive a W-2 form from your employer that shows your wage and salary information as well as how much tax you paid.If you have paid tuition or interest on student loans, you will get 1098 forms.If you receive a pension or dividend income, you will get a form for that.
Step 4: You can contact the IRS for documents that you can't find elsewhere.
Form 4506-T can be used to request information on your W-2s, 1099s and 1098s.Form 4506-T can be used if you don't have access to previous information.The form can be found on the IRS website.Simply fill out the form and submit it online.Print it, fill it out, and mail it.You won't get duplicate W-2s, but you will get information that's necessary for filing back taxes.
Step 5: You should plan ahead.
It takes a long time to get the documents.The IRS may take 45 days to give you information if you use Form 4506-T.The IRS takes 6 weeks to process an accurately completed tax return.You will need to plan early if you want to get a refund quickly.
Step 6: The correct filing form should be used.
Once you have your available forms, filing your taxes involves inputting information from those forms onto something known as Form 1040, which is the main tax return form.For the year you are filing, always use the correct form.If you plan to file for a previous year's income, you can't use the form this year.If you use one, you can get the forms online at the IRS website, from an IRS office, or from your tax preparer.
Step 7: To save money, do your own taxes.
The most common way to do your taxes is electronically.Most Americans do their taxes electronically.There are a few ways to do this.The IRS Free-File service can be used.If you make less than $66,000 a year, Free File gives you free tax software to prepare and file your returns.If you choose, you can use Free File's online fillable forms to prepare and file your taxes.For more information, go to the IRS website.The fillable forms option only requires following instructions and inputting information.Purchase tax-filing software or use a free service like CreditKarma to prepare and file your return.H & R Block, TaxAct, and Taxslayer are some of the common programs.
Step 8: If you need help filing, use a tax professional.
It's in your best interest to file accurate returns the first time you do.Errors in your filing can be avoided if you get help from a professional.If you hire a tax professional to prepare your taxes, you may be able to reduce the amount you have to pay as well as facilitate a more equitable resolution with the IRS.They may be able to negotiate with the IRS.Tax professionals can help you stay on the safe side.If your taxes are fairly simple, a tax professional can include a storefront service like H&R Block.If your taxes are more complex, you may want to look elsewhere.A state-licensed accountant is a certified public accountant.If you want to work with a CPA, you should ask about their expertise in income taxes.A tax attorney can help with complex tax preparation and disputes.Enrolled agents are licensed by the federal government and can advise, represent, and prepare your tax return.The most up to date tax law and information can be found in continuing education.A tax professional who specializes in taxes and has unlimited representation rights before the IRS is called an ana.
Step 9: You can file your taxes with the IRS.
When you are done, these resources will e-file your return for you if you use Free File Fillable forms, free file software, or another form of software.If you work with a tax professional, they can file the forms for you.Mail the completed forms to the IRS if you chose to do so.Use the address that the IRS provided in their correspondence to you if they contacted you requesting back taxes.If you want to file your taxes at a different address, use that address.The instructions can be found on the IRS website.Up to 6 months after the filing deadline, you can e-file your taxes for free.There is a statute of limitations on what the IRS can audit and what they can collect.If you fail to file a tax return or are accused of tax evasion, the IRS has 10 years to collect taxes.The statute of limitations will be set into motion if you file your taxes, but failing to do so will leave the statute in limbo.
Step 10: If applicable, file your state back taxes.
Get caught up if your state requires you to file taxes.State taxes should not be neglected, even though the penalties for not filing state taxes may be less severe than federal penalties.You can use any forms required in your state.Contact the Comptroller's office if you want to check with the Department of Revenue.Remember to use forms that are current for the year you owe taxes.If you file with the wrong documents, you could end up with a misleading application.
Step 11: The IRS has a policy on late payment.
If you end up owing money to the IRS and can't pay it in full, you can request an additional 60 to 120 days from IRS to pay your account.No user fee will be charged if you call 800-829-1040.You can request to work out a payment plan with the IRS if you can't pay in full within 120 days.
Step 12: If you apply, you can set up a repayment plan.
You don't have to pay your full balance when you file if you owe money.After you have filed your taxes, you can request a payment plan.If you owe anything, you don't need to talk to an IRS representative.If you owe less than $50,000 in combined taxes, penalties, and interest, you can set up a payment plan by visiting the Online Payment Agreement website.If your application is successful, you will be notified immediately.If you can pay off the balance in 120 days, you will be able to apply for a payment installment online.If you owe over $50,000 and can't pay it off in 6 years, you need to talk to the IRS.If you are going to request a payment plan, you should send in a partial payment.What is a reasonable amount to start?
Step 13: Pay as much as you can.
Unlike other tax penalties which stop when the maximum is reached, interest will continue until you have paid your debt in full.It's in your best interest to pay off a large portion of the debt as soon as possible.You can pay your taxes with a check, money order, electronic funds withdrawal, or credit card.Processing fees are charged for payment by credit or debit card.
Step 14: Penalties and fees can be reduced.
If you have filed your taxes, you can talk to the IRS about the fees and penalties they may have assessed.If you have filed taxes late for the first time, you may be eligible for abatement.If the IRS deems you no longer able to pay your tax debts, you can set up an Offer in Compromise.The Offer in Compromise pre-qualifier can be found on the IRS website.You must fill out the most recent form if you qualify.You have to list your assets, such as cash and investments, the current market value of any property and vehicles that you own, as well as business investments.Monthly expenses include healthcare and health insurance, food, shelter, and utilities.Your income, expenses, ability to pay, and the value of your assets are some of the factors the IRS considers in determining whether to reduce your debt.There is an application fee.