If it’s been a few years since you last filed your taxes, you might have some questions about what you can do to prepare for this year’s tax preparation in Union City, NJ and help you get yourself back in good standing. Your reasons for not having filed a return may vary—perhaps you weren’t able to pay your taxes, or simply couldn’t get all of your paperwork together. Whatever the reason, it’s important that you get organized and back in good standing as soon as you can, and working with a tax preparation professional is the best way to accomplish this.
The most common question people in this circumstance will have concerns how many years back they should file. According to IRS policy, taxpayers must file six years of back tax returns to be in good standing, though there are some circumstances in which more than six years of taxes may be required.
Here are a few tips to keep in mind if you are required by the IRS to file back taxes:
- Confirm the number of years for which you’re responsible: Contact the IRS, or have your tax professional do so on your behalf, and make sure you only need to provide six years of returns. Do this before you proceed with any tax preparation steps so you know exactly what your tax responsibility entails.
- Know your refund limitations: The IRS will only pay refunds within three years of the due date for that return. So even if you file six or more years’ worth of taxes, you’ll only be able to claim up to three years’ worth of refunds.
- Seek penalty abatement: When filing back tax returns, you are allowed to ask the IRS not to charge you penalties for a failure to file. You can use first-time abatement for the first year, if you qualify for that abatement. You can also submit “reasonable cause” arguments that defend your reasons for filing late.
- Be aware of the penalties: If you’re not able to get any form of penalty abatement, know that there can be some hefty penalties associated with going years without filing your taxes. Over the course of time, these penalties can grow to up to 47.5 percent of the tax bill, which can add a whole lot of money to what you owe the federal government.
- Set up a payment plan: If you owe money to the IRS and are unable to pay, you should set up a payment plan with the IRS to pay off your bill over the course of time. A failure to follow up with the IRS to establish a payment agreement could result in the IRS enforcing collection on you, which will significantly damage your credit.
For more tips about filing back taxes, we encourage you to call and discuss tax preparation in Union City, NJ with the team at Kedean’s Generation. Our experts bring over three decades of experience to a full range of tax services. We look forward to working with you soon.
Categorised in: Tax Preparation