The problem with the way tax law is written is that it’s far, far too confusing. The nice thing about e-filing services is that the cut through that mess and help you get the biggest refund for the most money (and time) invested. But as good as they are, they can’t answer every question.
In fact, one of the most common ones I get asked is: just what are past taxes anyways?
Past taxes is a pretty broad term. It mostly refers to two things: any taxes you have paid in the past, and any taxes you haven’ paid, that are also in the past. The latter can also be called back taxes, past due taxes, and unfulfilled taxes.
Current (or paid) past taxes are actually more important than most people think. If you file your taxes on time each year–whether by April 15th or by filing an extension –you tend to not think about what your old taxes were like. However, those taxes can be crucial. They help you file current taxes and they also help you cut your bills! Hang on to your past tax returns, because you might need them sooner than you realize.
Of course, unpaid pas taxes are also pretty important. First, because they are scary. Having debt is always worst than not having debt–and having debt you could get huge fines or even go to jail for is pretty frightening! However, most people don’t realize they have nothing to fear. Not only are past taxes easy to file, but they often work in your favor! That’s right–by filing your past taxes you not only reduce your worries, you often get money back! Most people who fail to file those past tax returns are owed money. So if you’re one of the, file today!
Past taxes aren’t as scary (or as unimportant) as they might seem. In fact, I believe they’re not only pretty dang easy to deal with, they’re also essential to a healthy financial future. But the first step on that road is just knowing what they are.