- Go over your filed return and double check to make sure you didn’t miss any major deductions. If you find you did miss a large deduction you can submit an amended tax return and then receive your new tax amount owed. If you don't have any missed deductions or you did have missed deductions and you still can’t pay the back tax move on to the next item.
- See if you can clear up the tax debt on your own. Generally it is fairly easy to setup an arrangement with the IRS if you owe less than $10,000. If you can’t pay the tax amount in full, the IRS will want you to setup an installment agreement. With this type of agreement you pay back the taxes owed in smaller increment monthly installments. There are other forms of settlements available from the IRS, but these methods are much harder to obtain and it is highly suggested that you hire a tax expert when trying to do those kinds of filings.
- If you owe over ten thousand dollars, it is important that you hire a tax professional. There are 3 main types of tax experts that can help settle tax debts, CPA, Tax Attorney, and an enrolled agent. All of these professionals do similar work, but some may be better than others depending upon tax situation. When hiring a professional you should always consult with a few experts. The majority of tax relief companies will offer a free, no obligation consultation. They will give you your likely outcome and a price estimate for their work.
If you owe back taxes, it is best to quickly determine the best method for settling and settle as as soon as you can. Everyone has heard nightmares of people losing homes, losing assets, getting wages garnished etc. The IRS has more powerful collection mechanisms than any other collection agency in the United States. The good thing is, the IRS wants you to settle and will work with you. Ignoring the IRS can be a very bad mistake, so resolve back taxes as soon as you can.