You need to protect yourself if back tax preparation is an issue. Filing your tax returns can get you out of trouble with the IRS faster than if you don’t file.
First, you need to gather all your tax documents. If any critical documents are missing, you can ask for copies from the IRS for free. Ask yourself questions such as, when did I last file a tax return? Do I have copies of them? Do I have W-2s and other tax documents for the years I need to file for?
Part of back tax preparation if you are going to prepare and file yourself is to make sure you have an easy to use software that is reliable. Plan on spending at least three hours for each tax return you need to file. With that being said, hiring an experienced tax expert can really help you deal with any IRS problems.
You won’t know if you are getting a tax refund or owe the IRS until you or your tax professional have prepared your tax returns.
People that end up filing late are usually entitled to a tax refund. It is important to know that there are time limits for debt collection, audits and refunds.You should have an estimate for how long it is going to take to receive your tax refund check because if you owe back taxes, you should know how much of the refund will be going to the back tax debt. You may want to consider making estimated tax payments for the following year if you think you might end up owing the IRS.
Taking care of back tax preparation is important and you should create a plan on how to pay back your taxes. A plan to protect yourself from an IRS lien, levy, assessment or investigation is also vitally important. It can be simple, but requires good judgement, some patience and the advice from a tax professional. The worst thing you can do, is nothing. Put together a plan such as a monthly payment plan, if you cannot pay the full amount owed.
Don’t forget to plan ahead. Focus on future tax debt and not just back tax preparation. Take this opportunity to review your tax situation overall and devise a plan for reducing your taxes and reaching your goals financially.