What Are Back Taxes?

Many taxpayers owe the IRS back taxes and don’t even know it. If you’re worried about whether or not you owe back taxes, it’s important to first know what back taxes are. Basically, back taxes are taxes not completely paid when they are due, whether they’re taxes assessed by the federal, state or local government. There are basically three reasons you could owe back taxes:

By filing a tax return, but not completely paying taxes by April 15
This is the most common reason people accrue back taxes. For whatever reason, many people file their returns on time, but fail to completely pay their tax debt. “Failure to Pay” penalties are quickly assessed to this type of back tax.

By filing a tax return, but failing to report all of your income
Because the IRS receives their own copies of W2 forms, they know how much everybody makes in a year. If they notice a discrepancy in the W2 form they receive and an individual’s tax return, they’ll send out a Proposed Tax Change Notice. Soon thereafter, they will assess a new tax amount, plus fines.

By neglecting to file a tax return all together
The IRS receives copies of W-2s from employers, so they know who has not files tax returns. If an individual does not file a return, the IRS eventually files one for them and assesses back taxes.

Learn more about back taxes by reading our Guide to Back Taxes.

The fines from back taxes can accumulate quickly. Contact Omni Financial today for help with dealing with your back taxes.