One of the biggest stress-causing problems facing many hard working Americans today is the need to file back taxes with either the State you live or the IRS. From having to gather income and tax records from previous years, to finding a qualified tax service to help you along this process, there is no arguing that when you need to file back taxes at any level, this project is usually full of stress for any individual or family.
Now imagine what happens when you find out that you owe a large sum of money? The stress grows even further. But, in reality, there are several things that anybody can do to help ease the burden of filing back taxes and finding effective solutions to repay the government taxes owed. Here are three easy steps for filing back taxes that will reduce your stress level and permit you to get this done in a short and painless method.
1st: Make Sure You Gather All Applicable Tax Documents
The first thing that any responsible person needs to do when getting ready to file back taxes is to start from the beginning. And in order to begin, you need to ask yourself a few important questions including:
When was the last year of filed tax returns? If you need to contact the IRS or your state tax office to get this vital information to receive in order to begin the process.
Do I have all the appropriate W-2 documents for each year that I’m missing tax returns for? This is another vital step to getting prepared for back tax filing. Without knowing exactly what you brought in, or taxes you paid, it’s not possible to file a back return. Make a list of any work you completed in the years you have not filed a tax return and contact the employers to have them send you a W-2. It’s required by law that they comply to these standards, so don’t feel intimidated by anything they might tell you.
Do I have all of my income and expense information?
- Personal Information: This information should include the legal names of who is filing and who is covered by the return.
- Income: In addition to your W-2, common forms include 1099 forms for other forms of income such as self-employment, investments, and retirement distributions, and K-1s for any partnerships in which you participate.
- Business Information. Make sure to keep the business income and expense items separate from your personal information if you own a small business or have other income on the side.
- Deductions: While you will receive Form 5498 for IRA and health savings accounts contributions from vendors, and Form 1098 for home mortgage interest deductions, most of the information documenting allowable deductions such as business expenses, entertainment, or travel must be elicited from other financial documents such as check registers, cancelled checks, bank statements, and credit card statements. Download and print summaries of the prior year’s transactions for each credit card, and review each transaction to determine whether it may be deductible.
2nd: Hire A Good Tax Professional
Even if you’re great at filing your own taxes, a smart solution which will reduce stress is to hire a seasoned tax professional who has experience in filing back returns. There are many requirements that are different in paying back taxes as opposed to filing new tax returns each calendar year – and tax professionals have this info on file. Reduce your own stress and let a professional help you with this process.
3rd: Determine Whether You Are Receiving A Refund Or Owe Money
The third thing you need to determine is whether or not you will be receiving a return from the IRS or whether you will owe money. If you’re filing back taxes, it’s most likely that you’ll end up owing Uncle Sam some more of the hard earned money that you’ve made. By working with a seasoned tax professional, they can help reduce the amount owed in many ways, but you need to know prior to filing your taxes whether you need to pay taxes or will receive a refund.
If you are in the position where you owe the IRS money, don’t stress about it; there are effective measures and solutions available. In the unfortunate situation that you have make a move to get cash out of your home, Big State Home Buyers can (and has) helped make that challenging situation move forward smoothly. Discover the facts about how they can help transform this financial situation a stress-free and complete solution.