How do I catch up on my unfiled taxes?
Paying taxes is something most people grumble about. While some tackle their returns on their own, others rely on professionals, especially if they have complicated finances. However, you may be among those who has put off filing your returns until you are several years behind. Sooner or later, the IRS will catch up with you, and it may be a wise idea to take care of the situation before then.
Resolving your delinquent taxes may be as easy as filing those late returns. Unfortunately, if you owe back taxes, your situation may be more complicated. Nevertheless, you may have options, and with the advice of a legal professional, you may be able to minimize any negative consequences.
Preparing to make things right
The first step to settling the issue is to gather your tax documents from the missing years. This includes your W-2 forms or other documentation related to your income. If you don’t have these for the years you didn’t file, you may request them from your employer or the IRS. When you have your documentation, you may file your returns electronically, although you may find it more beneficial to seek the assistance of a tax attorney.
Having a tax attorney to help you may also improve the chances of salvaging any refunds the IRS may owe you from those years in which you didn’t file. If you expect a refund from one year but owe taxes for another, your refund may offset your tax debt.
What if I owe taxes?
If you complete your taxes and discover you owe a significant amount to the IRS, you have a right to be concerned. The IRS may decide to place a lien or levy on your assets to regain the money you owe. You may wish to contact the IRS to set up a payment plan, or you can seek legal assistance in requesting an offer in compromise from the IRS. A successful OIC involves the following:
- You owe more to the IRS than you have in assets.
- You are unable to convince the IRS that you don’t owe the taxes.
- Even with a payment plan, repaying the debt will create a financial hardship for you.
- The IRS agrees to reduce the amount of debt you owe.
- You agree to relinquish any tax refunds the IRS may owe you while you are seeking an OIC.
A Nevada attorney can negotiate for you to bring about the best possible resolution. If your OIC is accepted by the IRS, your next step is to make a plan to avoid falling behind on your taxes in the future.