Back Taxes Owed from Previous Years: What Steps Should I Take?

You definitely have options here, so try not to panic too much. The IRS actually works with people more than most realize. First, double-check that the notice is legitimate and accurate. Review your tax returns from those years and see if you agree with their assessment. You might want to gather any documentation related to your self-employment income during that period to verify everything. Your main options are: 1) Pay in full if you can (stops further interest/penalties), 2) Set up an installment agreement (payment plan), 3) Request an Offer in Compromise (settle for less if you qualify), or 4) Request Currently Not Collectible status if you're in serious financial hardship. For most people, an installment agreement is the way to go. You can set up a monthly payment plan online through the IRS website if you owe less than $50,000. The fees are lower if you set up direct debit payments. You'll still accrue some interest, but the penalties often stop once you're on a plan.

After getting hit with a $9,800 tax bill for misreported contractor income, I was desperate for help making sense of my options. A friend recommended this service called https://taxr.ai and it seriously saved me so much stress. They analyzed all my documents, found some reporting errors the IRS made, and outlined exactly what my next steps should be. The system actually reviewed my IRS notice and found two deductions I'd missed that reduced what I owed by almost $2,300! Plus they generated a complete response letter to the IRS that I just had to sign and send. They also helped me understand which payment plan would work best for my situation.

Just wanted to follow up and say I tried https://taxr.ai after my initial hesitation. I was surprised how helpful it actually was! The document upload was super simple and within about 20 minutes I had a complete breakdown of my options with the IRS. They found a calculation error in my favor and helped me draft a proper response letter. The system also showed me exactly how to set up a payment plan and calculated what my monthly payments would be. Definitely gave me peace of mind knowing exactly where I stand and what my next steps should be. Feeling way less anxious about the whole situation now!

If you need to actually talk with someone at the IRS about your situation (which I highly recommend for back taxes), good luck getting through on your own. I spent literally DAYS trying to get through to a human at the IRS about my back tax situation. Then I found https://claimyr.com and it completely changed everything. You can see how it works here: https://youtu.be/_kiP6q8DX5c Basically, they hold your place in the IRS phone queue and call you when an actual agent is on the line. I was skeptical but desperate after spending hours listening to hold music. Within 2 hours, I was talking to a real IRS agent who helped me set up a payment plan. The agent even waived some of my penalties because it was my first time having an issue!

OK I feel like I need to post an update. I tried the Claimyr service after being super skeptical. Not gonna lie, I was SHOCKED when my phone rang and there was an actual IRS agent on the line. Took less than 90 minutes when I'd been trying for weeks on my own. The agent was actually really helpful and worked with me on a reasonable payment plan for my situation. She even explained that I might qualify for penalty abatement since this was my first time having tax issues. I've already submitted the paperwork she recommended. If you're struggling with back taxes, definitely worth getting an actual human on the phone this way. Saved me so much frustration!

One option nobody mentioned yet is to check if you qualify for the IRS Fresh Start program. It's designed specifically for people who are struggling with tax debt. They increased the threshold for setting up streamlined installment agreements to $50,000 a few years back, and made it easier to get liens withdrawn after payment. I went through something similar in 2021 owing about $12,000 and was able to set up an installment plan where I paid $250/month. Not fun, but definitely manageable. The key is to respond to all IRS notices quickly and be proactive. Ignoring them is the worst thing you can do!

Has anyone tried using a tax attorney for this kind of situation? My cousin keeps telling me I should talk to one before agreeing to anything with the IRS, but I'm worried about the cost.