Are You Behind on Your Filings?

Annual tax filing is something many people put off until last minute. Occasionally, taxpayers forgo filling altogether and may find themselves having not filed for a number of years. If you are behind on filing your taxes this article may help to get you organized and caught up.

Step one is to gather all related records and information in order to file a tax return. This includes all W-2s, 1099s, and any paperwork related to deductions. If you have lost any of these records you may need to contact former employers, financial institutions, and possibly the IRS to get copies of income transcripts.

Once you are organized with the necessary records it is time to file your past due return(s). At this time we do not offer software to e-file past returns, but you can print off copies of prior year tax forms. Depending on what is involved you may even need to hire a tax professional to prepare these for you properly.

If you have multiple tax returns outstanding and you find you have a combination refunds own and taxes due, expect that the refunds first be applied to pay any back taxes and interest that are own.

Not taking care of back taxes as soon as possible can result in a taxpayer falling further behind with the IRS thanks to compounding interest. If you owe back taxes you may consider applying for a payment plan with the IRS. You also may want to consider reevaluating your withholding to assist with paying off this debt sooner, although additional withholding will not be applied to back taxes until the following year when the next tax return is filed. If you are not properly withholding or you wish to make adjustments to your withhold you will need to file a new W-4 with your employer.

Setting Up an Installment Agreement

If you are ineligible for a payment plan because you owe too much, you may still be able to pay in installments. Once you have filed all of your required returns so that the IRS can properly calculate how much you owe, you can complete and mail Form 9465 Installment Agreement Request and Form 422-F Collection Information Statement. For questions or to make sure the IRS knows you are applying for an installment agreement, call 800-829-1040 or the phone number on your bill or notice.

Avoiding Default

The IRS lists the following steps that individuals and businesses can take to avoid defaulting on tax debt.

1. Pay on time and pay at least your monthly minimum. Paying late or underpaying can result in further fines or a violation of your agreement
2. Understand that your future tax refunds will go directly toward your debt until it is fully paid off.
3. On your payment, always include identifying information, including your name, address, social security number, daytime phone number, tax year, and the type of tax return that you filed.
4. If you move, make sure your statement is sent to the correct address by filling out Form 8822 Change of Address.

Finally, know that the IRS has stated that it generally does not take enforcement actions once it is considering your installment agreement or while that agreement is in effect. Also, there is a 30-day grace period after an agreement request is rejected and during the time the IRS evaluates an appeal of an agreement that was rejected or terminated.