How to Get a Settlement on Your State Back Taxes

If you owe money on your State taxes, and have decided to try to get them reduced with a settlement, you have probably come to the conclusion by now that it may not be as easy to do as some people have made it out to be. Currently, there about 41 states that collect resident individual income taxes, and out of that number, about 35 of them actually base their system according to the refunds that you get from your Federal return.

If you are in a position where you need to negotiate a settlement with your State government, the process is going to be essentially the same as it would if you owed money to the IRS, however there are going to be some minor differences. All of the regular resources, such as the usual tax professionals that issued you your return may be able to offer you assistance on how you need to get started.

The first order of business is to go through all of your paperwork and make sure that you have already filed a tax return for the years in question. Most tax organizations will not even talk to you about a settlement until you have taken this step. In order to get past this step, you will need to locate or request copies of your tax information, as well as the prior years State tax forms. This may require you to do a whole lot of digging and searching, but remember that you cannot move on to the next step until this has been done. You may also be able to obtain this information from you employer because they are required to keep this information on file for several years.

You will also want to call the Department of Revenue in your particular state to find out what the deadlines are to get the taxes filed, and what kind of penalties and interest may be assessed. Many states actually use the 3-year deadline currently being utilized by the Federal government. If you find that any of the State taxes that you owe are getting ready to hit the deadline, you may want to work on these first. In the event that you are actually owed a refund there will be not penalties assessed.

It is always best to file all of your subsequent State taxes at the same time however make sure that you send them all in different packages so that you can minimize the chances that there will be errors on their behalf, as well as to lessen your chances of an audit. In the event that you have both a refund and an amount owed, the taxing authority will automatically hold the refund to pay off any taxes owed.

Most people opt to use a tax professional in lieu of going it alone. Most tax professionals offer you the added peace of mind of knowing that you have a professional who knows the ropes, working on your behalf.

After you have resolved your tax issues, it is imperative that you not fall into the cycle again. The best way to accomplish this is to always remember to file your taxes on time. When you are reviewing your taxes each year prior to filing them, make sure that you are very meticulous, and that your make sure that you look for every tax break that you possibly can.