So you’ve found out that you owe back taxes – now what? First, sit down and take a deep breath. Next, read on to get an overview of the possible approaches to your situation. Remember, the IRS has 10 years to collect any tax due, so you’re going to have to deal with this sooner or later. Sooner is best. Start with these steps:
Decide if you will do this yourself, or hire a tax professional.
If you owe over $25,000, you are required to hire a tax professional to help you through the process. However, with the dizzying array of choices, forms, and information that you will have to come up with, you will most likely benefit from hiring a professional, no matter how much you owe.
Ask about their credentials. A tax professional needs to be a CPA, Enrolled Agent, or Tax Attorney. Those are the only professionals allowed to practice before the IRS.
Examine Prior Year Returns.
Check your back tax returns and see if you can reduce your liability for any previous year’s taxes.Reviewing those returns will make sure that they are accurate, and that no deductions were overlooked. This is an area where a tax professional can save you both time and money, both through quickly reviewing your returns, and filing amended returns if needed. Amending returns requires substantial paperwork and reprocessing, and there must be lots of supporting documents or you risk an audit.
There are 5 strategies for getting out of tax debt – here is an overview to get you started (and we’ll go into more depth in the next Blog).
For more info contact Litchfield County tax attorney Martha Miller at 860-435-4666, or click on the menu above to explore our website.