How to File Back Taxes
Filing your late tax returns is the easiest approach to take care of your back taxes. Just keep in mind that time is running out if you are due a refund. After the initial tax filing deadline, you have just three years to file your return and get your money back. Use these procedures to file your past-due taxes to prevent further delays:
Consequences of Unpaid Taxes
Even if you may have good reasons for owing your taxes, putting off the problem won’t make it go away. Every taxpayer who is supposed to file a tax return but does not do so is listed by the IRS. Similar to the naughty list, but with much more severe consequences than a lump of coal. You might experience the following if you owe back taxes or have unfiled tax returns:
If you don’t file your tax returns on time, the IRS may impose both a failure-to-file penalty and a failure-to-pay penalty. The minimum fine is $435 or 100% of the taxes owed if your return is 60 days or more delayed (whichever is smaller). A 5% penalty fee on the amount of tax due (up to 25%) will be applied for each month your return is not filed. The penalty is decreased to.5% every month if you have filed but not paid. However, the maximum fine is 25% of your unpaid taxes.
To ensure that your tax debt is paid up before any other creditors, the government may issue a tax lien against your property.
Seizure of Assets
Common Questions About Back Taxes
The IRS will notify you of the entire amount due for overdue taxes, including interest and penalties.
Your credit record may not necessarily suffer if you owe back taxes. In actuality, dealing with back taxes no longer has a direct impact on your credit. Yet it could be challenging to pay other payments if you are having trouble paying your back taxes. Your credit score may suffer if you default on other credit obligations (such as credit card bills or auto loans). Depending on your situation, unpaid taxes might have an indirect impact on your credit.
Yes. You may not get your refund at all if you have back taxes. Your refund will be automatically applied to an existing tax debt if you owe taxes.
In the United States, You cannot be put in jail merely for owing tax debt. If you cheat on your taxes or engage in tax fraud, you could end up in jail. Yet, if all you are doing is having trouble paying a huge tax bill, no one will threaten you with jail time.