You can calculate what you owe in back taxes fairly accurately without even contacting the IRS.
- Catching up on your taxes
- Step 1: Obtain copies of all tax returns that you still owe taxes on
- Step 2: File your past-due tax returns
Catching up on your taxes
Step 1: Obtain copies of all tax returns that you still owe taxes on
The first thing you'll need to do is gather all of your relevant returns and documents that relate to each year you still owe back taxes for. Each of your tax returns will report the amount of tax you owe, but never paid. If you did file a return but no longer have a copy, you can obtain one from your accountant who prepared it for you or if necessary, you can order a duplicate copy from the IRS.
Step 2: File your past-due tax returns
If your back taxes relate to returns you have not yet filed, then you can calculate the amount of tax you owe for each year by preparing the actual returns. However, when you do, you must use all tax forms for the particular prior year that you are filing.
For example, if during 2023 you decide to prepare your 2020 tax return; then you must use 2020 tax forms, schedules and instructions. If you mistakenly file using the forms for a different tax year, the IRS is likely to notify you of the error.
Accessing these old forms is not as difficult as you may think. The easiest option is to use tax preparation software, such as TurboTax. TurboTax provides you with access to many of the IRS forms from prior years. Alternatively, you can search for each form you need on the IRS website. However, many of the older forms on the IRS website require you to print and fill them out manually.
Step 3: Calculate your interest and penalties
Regardless of whether you filed the tax return years ago or are preparing it for the first time this year, you must increase your tax bill for the interest and penalty charges the IRS imposes when you pay your taxes late. Calculating your penalties and interest will provide you with a more accurate estimate of what you need to pay.
For example, if you file your tax return five months or more after the original due date, then you must increase your payment by 25 percent of the tax you still owe.
Step 4: Pay your back taxes
Once you determine how much you owe the IRS, it’s in your best interest to pay the amount in full or make payment arrangements immediately. At a minimum, your outstanding back tax balance will continue to accrue interest each month it remains unpaid.
If the amount you owe is significant and you are unable to make a lump-sum payment for the full amount, you should contact the IRS to work out a payment plan. Once your installment plan is in place, you can avoid more severe collection enforcement by the IRS as long as you adhere to all terms of the agreement and make each payment on time.
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