Tax-Filing Tips If You Still Owe Taxes from Last Year

Tax-Filing Tips If You Still Owe Taxes from Last Year

• Feb 01, 2023

When you still owe taxes from the last time you filed your return, the prospect of filing again can feel overwhelming. Unfortunately, simply trying to avoid the problem will only make matters worse, so it’s important to be proactive about filing this year’s taxes in order to get last year’s under control. Keep reading to tips on filing your taxes if you still owe from a previous tax year.

File Your Taxes Quickly

As we already stated, avoiding the problem certainly doesn’t get rid of the issue at hand. Instead, if you don’t file your tax return, you’ll be adding failure-to-file penalties and late payment fees in addition to what you already owe. One of the most important tips we can offer in this situation is to file soon and, if you owe taxes again, do your best to pay it. Even if you haven’t been able to pay down your previous debt, paying off your new tax debt will help you avoid adding more problems to your plate.

Make a Good Faith Payment

Even if you can’t afford to pay for all of the taxes you owe, you should make every effort to pay any amount that you can on your tax debt. Making a good faith payment demonstrate your willingness to pay your taxes, even if you’re not fully able to settle it. This often works in your favor when negotiating your payment plan terms with the IRS, just as filing your taxes on time this year will do the same. While it may seem counterintuitive to pay on new debts before settling old ones, this approach often works best towards getting you on the road to managing all of your tax debts, no matter how many years you of taxes you may owe.

Communicate with the IRS

Whether you can pay on your new tax debt, don’t owe this year, or now have additional debt to face, one of the most important things you can do is to communicate openly with the IRS from the very beginning. The IRS is typically very open and willing to set up plans with taxpayers who are proactive about handling their tax debt. Reach out to them to set up a plan or openly discuss other options for settling past and present tax debt.

Establish a Payment Plan

One of the best ways of handling any tax debt is to set up a payment plan with the IRS. This can be done even after you’ve filed your taxes this year. In fact, if you owe on taxes this year and you have a previous tax debt, it is possible to get all of your tax debt rolled into a single payment plan. This must be handled with care and precision. You’ll want to ensure that you apply for the right tax debt relief program and that your application is filled out correctly the first time. The longer your application takes to be processed, the more fees and interest you’re going to accrue. The necessity of handling a payment plan application correctly leads us to our next point.

Get Help from a Professional

When your tax situation is simple, you might be fine trying to file your taxes alone. However, when tax situations become complicated, it’s better to seek professional help—and there’s no doubt that filing when you have existing tax debt is a complicated situation. It’s likely a good idea to work with a professional CPA for filing your current tax return. More importantly, however, you need to work with someone who’s experienced in handling tax debt settlements.

The professionals like those here at the IRS Advocates can help you apply for a tax settlement plan with the IRS, ensure that you’re applying for the right plan for your individual financial situation, and make sure that your application is filled out completely and correctly. This can expedite the processing of your application so that your plan is approved sooner, and you can start getting your debt under control sooner so that you acquire fewer fees and penalties on top of your existing debt.

If you have past tax debt that’s stopping you from filing your tax return this year, the IRS Advocates can help. We’ll help you get your debt under control, whether you need to settle last year’s debts, this year’s debts, or both. Contact us now to schedule a consultation, and we’ll help you find a tax settlement plan that works best for your individual financial circumstances.