• Back taxes are unpaid taxes from previous years—often due to unfiled returns, underreported income, or missed payments. The IRS adds penalties and interest until resolved.
• Received IRS notices? You likely owe back taxes. You can also check by reviewing tax transcripts or filing past returns.
• File ASAP. Delays lead to more penalties. The IRS can garnish wages, freeze accounts, or even revoke your passport.
• To file them gather income documents and file one year at a time, starting with the oldest. The IRS usually requires the last 6 years.
• If you can't pay, you still have options—like payment plans, penalty relief, Currently Not Collectible (CNC) status, or an Offer in Compromise.
• Owe Under $10K? You may qualify for a Guaranteed Installment Agreement. For larger amounts, a tax expert can help find the best solution.
What are back taxes?
Back taxes are unpaid taxes. You could end up owing back taxes because you didn’t file your tax return by the deadline, underreported your income, or didn’t pay your tax bill in full. The IRS can issue penalties and interest every month that you don’t file or pay your taxes, and these penalties continue to add up until you resolve it. The longer you wait to file and pay your taxes, the more you’ll owe.
How do I know if I owe back taxes?
There are a few ways to determine if you owe back taxes:
1. Prepare tax returns for the years you haven’t filed. This enables you to calculate your tax liability.
2. Access your tax records and transcripts. You can go to the IRS website to access your transcript online (you’ll need to create an ID.me account) or request them by mail (you’ll need your mailing address from your latest return).
IRS notices. The most obvious sign is receiving a CP59 notice from the IRS that they have no record of your tax return. These notices will escalate the longer you don’t address them. Here’s a glossary of IRS notices and what they mean.
What happens if I don’t file back taxes?
If you don’t file and/or pay your taxes by the deadline, the IRS will charge penalties and interest. And if you’re owed a refund, you won’t get it! The consequences get increasingly severe the longer you wait – including garnishing your wages, levying your bank accounts, seizing assets, and more.
Here’s a list of consequences you could face as a delinquent taxpayer:
IRS penalties and interest
• Failure-to-file penalty: 5% of your unpaid taxes per month (up to 25%)
• Failure-to–pay penalty: 0.5% of your unpaid taxes per month (up to 25%)
• Interest on unpaid taxes: the interest rate is determined quarterly and is the federal short-term rate plus 3%
Loss of credits, deductions, and refunds
• Loss of tax refunds: You have up to 3 years from the original tax return due date to file and claim any tax refunds. Otherwise, the IRS keeps your money! The IRS can also hold any future tax refunds until your past due returns are addressed.
• Loss of credits and deductions: In the event the IRS files a substitute return (SFR) for you, you may not be given credit for deductions and exemptions you would otherwise be entitled to, meaning you often end up paying more than you actually owe.
Tax liens and levies
• Bank account levy: The IRS can freeze and seize funds in your bank account.
• Wage garnishment: The IRS can take a portion of your wages directly from your paycheck until the debt is paid.
• Property levy: The IRS can seize and sell your real estate, vehicle, or other personal assets.
• Social security levy: The IRS can take a portion of your Social Security payments to collect past due federal income taxes through the Federal Payment Levy Program (FPLP).
• Securities and Accounts Receivable levy: The IRS may seize stocks, bonds, or business income from money owed to you by others.
The IRS can also…
• Revoke your passport: If you owe over $62,000 (2025 threshold), the IRS can request the State Department deny or revoke your passport.
• Take you to court: In rare, extreme cases, the IRS can take legal action or pursue criminal charges (e.g., for intentional fraud or evasion).
If you have past due returns or back taxes, it’s best to file as soon as possible and work with a tax professional to set up a payment or settlement plan with the IRS.
Ready to file you back taxes? Here’s a step-by-step guide: How to file back taxes (step-by-step)
1. Gather relevant tax documents (W2s, 1099s, etc.). If you don’t have them, you can request your tax records and transcripts from the IRS.
2. Choose a filing method. You can choose to do it yourself, use software, or seek professional help. Help me decide.
3. File one year at a time. The IRS generally requires you to file the last 6 years of taxes to be considered back in good standing.
4. Pay what you can if you owe taxes. Remember that penalties and interest accrue until your bill is paid, so paying as much as you can helps reduce penalties and interest over time.
Set up a payment plan or see if you qualify for tax relief. It’s best to consult a tax professional to help assess your situation and determine what relief options are available to you.
What if I can’t afford to pay my taxes?
If you’re feeling overwhelmed by a tax bill you can’t afford, take a deep breath. There are many tax relief options available to taxpayers, but navigating them can be difficult. It’s best to review your situation with a tax professional who can best advise your options for relief. Keeper offers a free consultation with a certified tax professional to help you assess and figure out next steps.
• If you’re expecting a refund, you must file your return to claim it within 3 years of the return due date. This rule also applies if you have a right to claim tax credits such as the Earned Income Credit.
• If you owe less than $10K, you’re eligible for the Guaranteed Installment Agreement if you meet several criteria:
• You’re an individual
• Owe <$10K including interest and penalties
• You have timely filed and paid all returns for the last 5 years
• Must be able to pay off debt within 72 months (6 years) or by the Collection Statute Expiration Date (CSED).
• You can apply online or submit form 9465 (Installment Agreement request).
• If you owe more than $10K, see if you can reduce your tax liability to less than $10K to apply for a guaranteed installment agreement.
• If you owe >$10K in penalties alone, you could apply for penalty abatement, which could eliminate the penalties if you have reasonable cause
• If you owe >$25K, you must agree to make payments through direct debit from your bank account or through a payroll deduction
• If you’re able to pay off your taxes in less than 180 days and owe <$100K, you can apply for a short-term agreement online to avoid the installment plan application fee
Potential tax relief options include:
• First-Time Penalty Abatement: If this is the first time with back taxes, you might qualify for a one-time penalty waiver.
• Payment Plans: Setting up an installment agreement can reduce the failure-to-pay penalty rate and help you manage your tax debt.
• Offer in Compromise: This program allows taxpayers to settle their tax debt for less than the full amount owed if they can prove financial hardship.
• Currently Not Collectible Status: If you cannot afford to pay your tax debt due to financial hardship, the IRS may temporarily halt collection efforts.
• Innocent Spouse Relief: This type of relief offers protection for spouses who unknowingly filed joint returns with tax errors.
When to get help from a tax professional
Not sure if it’s time to bring in a pro? If any of these situations sound familiar, working with a tax expert can save you a lot in time, money, and stress.
You should consider working with a tax professional if:
• You owe a large amount in back taxes
• You’ve started receiving IRS notices or threats of collections
• You haven’t file in multiple years of have complex tax situations (business income, a divorce, bankruptcy, or other life changes).
• You need to negotiate with the IRS for a payment plan, settlement, or penalty relief
• You simply can’t afford to pay your taxes and need help figuring out relief options
The truth is, the longer you wait, the harder it’ll get to resolve. But you’re not alone, and it’s not too late to turn things around.
Keeper offers a free consultation with a licensed tax professional who will review your situation, explain your options, and help you build a plan to get back on track without judgment or pressure. Book your free consultation today.
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