Aren’t you getting tired of looking over your shoulder? The IRS has 10 years to collect any taxes you owe, so getting behind with your taxes is not a problem that will go away any time soon. The smart play is to stop everything, focus on the problem, and make a plan to deal with your back taxes. There is no scenario in which the IRS decides to “let it go this time”. Anybody who tells you otherwise should immediately be disqualified from giving tax advice.
The first step in the plan is to gather the correct forms for all the tax years in question. Do you have all the proper employer year-end tax forms? How about the bank or brokerage firm statements? If not, you’ve got to arrange to get copies. There is simply no way to avoid filing a return for each of the tax years you missed, and before you can file a return you must have the proper records before you.
So now that you’ve gathered all the required forms and are ready to begin filing back tax returns, you’ve got to assess your general situation with regard to your taxes. Are your tax returns normally simple to file? Are you behind because of simple negligence or because some event in your life took precedent? If so, you may be able to spread all those papers out on the dining room table and solve your problem on your own.
On the other hand, if you own a business, have recently been through a divorce, if you changed jobs, or if you have made or lost significant amounts of money through investments, things can get complicated beyond your ability to deal with them at the dining room table. If this is your situation, you really should consider working with one of our professionals here at Powell Tax Law.
It makes no sense to keep waiting to resolve your back tax issues. In fact, there’s a chance you might save money by acting sooner rather than later. If you were due a refund on your taxes during one of the past two years you haven’t filed, you may still get some money back. However, for returns that are more than two years late, you automatically forfeit any refund you may have had coming your way.
Once your back tax returns are filed, you’ll have to deal with paying any tax you have due, plus all associated late fees and penalties. Generally, these can be set up on a payment plan and sometimes you can even apply for a waiver of penalties if you have a reasonable excuse for not filing on time.
But the most important thing to remember is this: you CAN resolve your situation with back taxes. You just need a plan, and most likely you need to work with someone who can quickly move you through the process. At Powell Tax Law, we understand the situation you’re in with back taxes, and we have the experience to guide you through the process so that you can start living your life looking forward, not backward.