Step-By-Step Process for Successful Back Tax Filing

Having completed returns can also help you qualify for Social Security benefits or even prevent you from having to pay back any money you owe. Here’s how to get started.

Gather Your Documents

The first step in filing back taxes is to gather all the relevant information and documents. This includes past tax returns, W-2s and 1099s, bank account statements, and credit card records. A thorough review of these documents will help to identify any deductible expenses and other income, which will then be used to prepare the necessary return. If you are facing any tax-related issues, choose a reliable service for back tax filing Marietta GA.

The IRS website can be used to obtain the proper tax forms for each year. Using the most up-to-date form for that year is important, as changes are often made to tax forms each year. You will also need copies of any investment and retirement fund statements, which can be obtained by requesting transcripts from the IRS.

If you have good record-keeping skills, assembling the necessary paperwork for each year’s return should be easy. For those who need to be more organized or who have lost financial records from previous years, it may be more of a challenge to recreate the information required for each year’s tax return. However, a thorough review of bank and credit card statements can help uncover some missing expenses and income, and the IRS does have methods for creating an income tax return even when no financial records exist. This process, called forensic accounting, uses Internal Revenue Service transcripts and other sources to create the missing information from the financial statement data typically found on bookkeeping records.

Prepare Your Returns

A successful back tax filing depends on your ability to prepare accurate returns for past years. Mistakes and oversights can ensure the processing of your return (and the issuance of a refund if you’re owed one).

The first step is to gather all the tax information that supports your filing for the year in question. It typically includes all your W-2s, 1099s, and other income documents supporting deductions and credits you qualify for.

You should also request IRS transcripts of wage and income data for the year in question. It will help you identify important data points to include in your return, such as total withholding and estimated tax payments you made throughout the year. Ultimately, you should use your research and the information you gather to complete your tax forms for the year in question.

If you need to catch up in your filings, the IRS may file a tax return called a substitute for return or SFR. It usually results in a smaller refund than you would have received if you had filed your recovery. It can also result in additional penalties and interest that can become costly if not paid promptly. It’s best to file your returns whenever possible to avoid the hassle of fines and collection enforcement.

File Your Returns

Filing a tax return is a good idea regardless of whether you are owed a refund. By filing the returns, you ensure that any income is properly recorded for the year, and you won’t be hit with additional penalties from the IRS.

You should file your prior-year tax returns as soon as possible to avoid the risk of losing out on refunds or tax credits that you could have received in past years. Individual taxpayers typically must file returns for the current year and the last six years to be considered “filing compliant.”

After completing your back-tax returns, reviewing them carefully for accuracy is important. Double-check your taxable income’s accuracy and ensure all withholding amounts have been included. If you need help with how to complete your return properly, it’s recommended that you contact a professional.

After you’ve filed your returns, the next step is to devise a solution with the IRS concerning any outstanding taxes you owe. This may involve an installment agreement or offer in compromise, depending on the size of your tax debt and your financial situation. If you cannot, you’re paying the total amount of your outstanding tax debt; talking with a professional about your options is also helpful.

Pay Any Taxes Due

If you owe money, the IRS wants you to pay it immediately. It also charges interest, which compounds daily. The interest rate is currently three percent but could rise at any time.

Regardless of whether you can pay, you should file and pay whatever you can. To avoid the failure-to-file penalty, which can be as high as 25% of the unpaid tax, it’s important to file your tax return on time. This penalty accrues at a rate of 5% of the due tax for each month or part of a month that the recovery remains unpaid. By filing your tax return on time, you can keep yourself out of trouble and avoid this penalty.

The Electronic Federal Tax Payment System (EFTPS) allows direct debit or credit card payments to the IRS. You’ll need your Social Security number or Individual Taxpayer Identification Number, a PIN or password, an email address, and a web browser. If you use this service, the payment will appear in your online account immediately after processing.

You can also pay by cash at an IRS-recognized payment processor, including some convenience stores and pharmacies. However, cash payments aren’t a good idea if you want to keep your personal information secure. Read more exciting articles on Today World Info