What are Back Taxes?
The term “Back Taxes” refer to tax debt that wasn’t paid when it was due. Typically, these are taxes that are owed from a previous year. You might owe back taxes if you were unable to pay on time, or if you failed to file your tax return on time and had tax liability that you owed.
How to Prevent Back Taxes from Piling Up
By filing your taxes on time and paying your tax obligation in full, you will prevent Back Taxes from accruing. If you haven’t filed a tax return, it is better to file it than wait to see if the IRS will find out, even if you know you can’t pay your tax debt. There are options for people who cannot afford to pay their tax debt in full. However, there are harsh penalties for failing to file. For example, the IRS can file your taxes for you if you haven’t done so on your own which can eliminate your ability to claim deductions and thereby reduce your tax liability.
There’s No Easy Way Out
You will be required to pay your tax obligation, but there are options that could reduce the amount you owe. If you have back taxes as a result of unfiled tax returns, it’s probably time to consult a tax professional who will likely recommend that file your return as soon as possible. The IRS has strict penalties for those who delay.
Many tax professionals provide a free consultation, which can inform you of the rights and options you have as a taxpayer facing back taxes. In many cases, you can save thousands of dollars or more by resolving your tax debt with the help of a pro – just make sure you follow our tips for avoiding a tax resolution services scam!
This article is partly contributed by USTaxReview.org from their article titled “Resolving Back Taxes”