How to File Back Taxes?

File Back Taxes

Do you have any unfiled previous tax returns? Do you find it difficult to file your taxes? Don’t be concerned! We can show you many simple ways to file back taxes, as well as what you can do if you are unable to pay any past-due taxes.

What Are Back Taxes?

Back taxes are any past-due taxes that were not filed on time. Many taxpayers are unable to pay their taxes and, as a result, are afraid to file their returns. It is important that you file your overdue taxes since the IRS can impose significant penalties and possibly place a lien on your property if you do not. Tax debt can put you in a slew of financial troubles with the IRS, including having your mortgage or loan denied. Even if you do not have the financial resources to pay your back taxes, the best approach is to file them on time.

How to File Back Taxes?

To submit back taxes, you will first need to gather various documents and tax forms. The first form you will need is Form 1040, which is the main tax form that individuals must fill out. The IRS updates this form every year, so make sure you have the correct form when you file your taxes. However, if you seek professional assistance, you will not have to worry about getting the necessary documents and filling everything out correctly. Contact SDG Accountants in Miami immediately for the best services for your tax and accounting problems.

You must also calculate your income while filing back taxes. The IRS requires your annual income so that they can calculate how much you should receive in returns. W-2 documents and 1099 forms contain your income statement. If you do not have your W-2s or 1099s, you can acquire a free copy from your employer or a copy of your tax transcript from the IRS. You must also file any income that is not recorded on a form, such as a capital gain from bitcoin or interest from a savings account. It is critical to have the proper files on hand when completing your taxes so that you or your tax firm can do so easily.

Why is it Important to File Back Taxes?

People sometimes do not file taxes because they are scared, they will not receive a refund or that it will add to their financial burden. However, they are incorrect; it is critical to file your tax returns to avoid losing a potential refund from the IRS. If you want to receive refunds, you have three years to file your taxes; otherwise, such refunds will be denied. If a taxpayer’s income tax returns have not been filed, the IRS keeps them. The IRS requires an adequate justification to exempt a person from filing certain returns; otherwise, they will remain on file until the taxpayer files the taxes.

Tax Return

If the amount owed exceeds what can be paid, the IRS will grant taxpayers a further 60-120 days if they request it. The request can be made through the Online Payment Agreement application or by calling 800-829-1040; there is no user cost associated with the request. If you are still unable to pay, you can request an installment plan from the IRS or you may be eligible for an offer in compromise.

There are other instances where taxpayers do not submit taxes voluntarily, even though they are able to. In such circumstances, the IRS may file a substitute return, which denies you any deductions or exemptions you may have been entitled to. If you decide to submit your taxes, the IRS will normally refund any deductions or exemptions you were awarded. Otherwise, the IRS will send you a Notice of Deficiency, which is essentially a 90-day deadline to file your past taxes or file a Tax Court petition.

SDG Accountants are tax specialists and advisors who can assist you in determining the best potential solution to your tax concerns. Contact us immediately by scheduling a consultation using the link below for the best rates available.

Failing To File Taxes

File Taxes

The Internal Revenue Service (IRS) is quite strict when it comes to employers/businesses failing to pay or even file taxes. There is no financial scenario that exempts you from paying taxes, and this is regarded as a significant infringement. Here is what happens if you do not file/pay your taxes, what you can do to avoid penalties, and how we can help.

What Can Happen If You Do Not File Your Taxes?

Every American is required to file taxes each year before the due date, even if they have not earned an income. There could always be additional taxes that need to be paid or a refund they are entitled to for taxes paid during the year.

If an American fails to file their taxes on time for the fiscal year, they may face substantial consequences. Assume you are that American, and your tax filing deadline was April 15, 2021. If you did not file your taxes for whatever reason and it is already June, you will be charged a failure-to-file penalty. The failure-to-file penalty is 5% of the unpaid tax for each month or partial month the return is late, with a maximum penalty of 25%. Remember that if your tax return is more than 60 days late, you may be charged a minimum of $435. The minimum penalty is $435, or 100% of the tax due on the return, whichever is lesser.

What Can You Do?

Even if you are unable to pay, you should always submit your taxes to avoid penalties and interest. Filing your taxes will spare you some fines as well as the loss of a potential return. Penalties for failing to pay are lower than failing-to-file so you need to file your taxes. If you are unable to pay, you can request an extension, which provides you with an extra six months to save and file your taxes. However, the extension must be filed before the due date, or you may be charged with a failure-to-file penalty.

What If You Fail to Pay Your Taxes After Filing Them?

If you do not pay your taxes after filing them on time, the IRS might charge you a failure-to-pay penalty. For the failure-to-pay penalty, you are fined 0.5 percent of your unpaid taxes for each month you do not pay, up to a maximum of 25%. Unpaid taxes also accumulate interest at the federal short-term rate plus 3%. Interest begins to accrue the day after your taxes are due and continues to compound daily until the debt is paid in full. Keep in mind that if you are charged both failure-to-file and failure-to-pay penalties, your total monthly interest cannot exceed 5%.

What Should You Do?

Do not be worried if you have unpaid taxes and have been charged penalties! You still have time to fix this! The first thing you should aim to do is pay as much of your taxes as possible before interest begins to accrue.

If you don’t think you’ll be able to pay your taxes on time, contact the IRS. They will do everything they can to assist you. They can help you figure out the best approach to pay your taxes while meeting your obligations.

How Can We Help?

SDG Accountants is one of the best accounting firms in Miami; we have many consultants that can provide you with the best guidance and lead you through the best solution in dealing with the IRS. When dealing with tax issues, you will need the assistance of an expert. You need a consultant who can represent you to the IRS and potentially identify a simpler way for you to pay your taxes. Our Miami Tax Accountant can assist you in negotiating payment terms and lowering your taxes to an amount you can afford.