Back taxes: the order that works
Confirm the balance, file missing returns, then choose a payment route. The costs and limits behind each step.
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Read the full guide: Back Taxes: What to Do When You Owe the IRS Money Now
Transcript
Back taxes, in the right order
Back taxes are federal taxes from an earlier year that are still unpaid, plus the penalties and interest since.
Step one: confirm the balance in your IRS online account, by year, before you agree to anything.
Step two: file any missing returns. Filing late costs ten times more than paying late.
The late payment penalty is 0.5% of unpaid tax per month, up to 25%.
Interest is 7% a year through December 2026, compounded daily, and it also runs on the penalty.
Step three: choose a plan. Short-term plans run up to 180 days with no setup fee.
The IRS generally has ten years from assessment to collect. Doing nothing does not run that clock down safely.
