Skip to content 
Understanding Back Taxes
Back taxes refer to taxes that remain unpaid or partially paid from the previous year or years. They can come about due to various scenarios such as incomplete tax returns, incorrect calculations, or failure to file tax returns entirely. Bearing the weight of back taxes can be quite burdensome, but it is essential to understand that solutions exist to navigate this challenging situation. Through Brightside Tax Relief, a nationwide tax relief company, we will provide you with the necessary guidance to overcome your tax troubles.
The Severity of Ignoring Back Taxes
Before diving into the range of solutions and strategies to address back taxes, it’s worth understanding the potential consequences of allowing back taxes to accumulate.
- The Internal Revenue Service (IRS) will charge interest and penalties on the unpaid amount, which can significantly increase your debt over time.
- You may face severe actions like tax liens or levies. A tax lien is a legal claim against your property to secure payment of your tax debt. In contrast, a tax levy is a legal seizure of your property to satisfy a tax debt.
- The IRS can garnish your wages or seize your bank account.
- Unpaid back taxes can negatively impact your credit rating.
Avoiding these possible outcomes is possible through adhering to some of the strategies discussed in this section.
Communicate with the IRS
Open communication with the IRS can help provide a reassurance to them that you intend to pay your tax debt, and this can ultimately reduce the chances of severe punitive measures. You can contact the IRS via their website or telephone assistance and inquire about your back taxes. They typically send out a notice before taking any severe actions like property seizure.
Consult with a Tax Professional
Professional tax advisors, like the experts at Brightside Tax Relief, have the knowledge and experience to provide customized solutions for unique tax situations. These practitioners can assist you in navigating the complex tax laws and dealing with the IRS. With their guidance, a tax professional will also ensure that you do not miss out on any deductions or credits that you may be eligible for, ultimately reducing your overall tax liability.
Solution Strategies
A strategy involves understanding your financial situation, seeing what options are available to you, and finally settling on the one that suits your circumstances best. Let’s look at the several solution strategies you could consider:
- Filing Back Tax Returns: If your back taxes are due to unfiled tax returns, the first step is to address this immediately. An IRS calculator can estimate your tax debt.
- An Installment Agreement: This is a monthly payment plan for paying off the IRS. It allows you to settle your tax debt over time.
- Offer in Compromise: This option allows you to settle your tax debt for less than the full amount you owe, provided the IRS agrees.
- Currently Not Collectible: If you cannot pay any of your tax debts, the IRS might declare you as ‘currently not collectible.’
- Bankruptcy: In some severe cases, declaring bankruptcy can wipe out your tax debt. However, there are strict criteria, and it should be the last resort.
Paying Back Taxes
There are multiple ways to pay back taxes. For instance, you could use a credit card to take advantage of reward points, although this strategy requires discipline to avoid replacing tax debt with credit card debt. Direct Pay is a secure service offered by the IRS to pay your individual tax bill or estimated tax payment directly from your checking or saving account at no cost to you. Filing for an extension is also an option, though be mindful that this only extends your filing deadline, not your payment deadline.
The Role of Brightside Tax Relief
At Brightside Tax Relief, we understand the stress and anxiety that can come with dealing with back taxes. Our skilled and experienced team of tax professionals is here to guide you through the process, offering robust strategies tailored to your particular situation. In this sense, dealing with back taxes doesn’t have to be a lonesome journey. With the right professional help, you can navigate this challenging period and get back on track with your expenses.
Final Words
Navigating through back taxes can be complicated and intimidating. However, with the right approach and assistance, it can be a manageable process. The key is to act quickly, ideally before the IRS takes enforcement action. The road to settling outstanding tax debt is smoother when you’re proactive about your financial responsibilities. Start with understanding exactly where your tax situation stands, exploring the various solutions available, consulting a tax professional, and finally implementing a personalized strategy to minimize the burden of back taxes.
Find more details on taxable and non-taxable income on the IRS website. By actively educating yourself and taking control of your back taxes, you are off to a promising start in your journey to a brighter financial future.
