People often ask me, “how do people fall behind on their taxes?”
I usually respond by explaining that there are many reasons people fall behind on their taxes – life’s circumstances usually being the leading reason – illness, or a family member becomes ill, or passes away. People get divorced, and/or lose their jobs and their income. And sometimes, it’s just a lack of knowledge – people don’t realize there are certain things they need to do to remain compliant with the IRS.
To make matters worse, the tax issue is neglected until it spirals out of control.
Unfortunately, many are not aware of the legitimate programs the IRS offers to taxpayers who cannot pay their full tax liability.
Estimated Tax Payments
Failing to properly file and pay quarterly estimated tax payments is one of the main reasons we see clients come to Streamline Tax Resolution for help with their back taxes. Many of these clients were unaware they were required to make quarterly individual estimated tax payments. Other clients had been impacted by a life event (see above), and could not afford to pay. Once you miss paying these quarterly payments, your tax debt can quickly escalate with penalties and interest the IRS will add on.
How do you know if you should be filing quarterlies? Continue reading Should You File Self-Employment Tax? →